Can Uber find a solution to its endless cash burn?

One big thing to start: Forensic experts hired by Jeff Bezos have concluded with “medium to high confidence” that a WhatsApp account used by Saudi Crown Prince Mohammed bin Salman was directly involved in a 2018 hack of the Amazon founder’s phone. Full tale here from Mehul Srivastava. 

Now back to the show . . .

Uber’s chief executive Dara Khosrowshahi passed through London earlier this week on his way to Davos. The stakes are high for him in the UK capital where Uber has been stripped of its London licence for a second time by the city’s transport regulator.

Keeping Uber running in London is just one of the many battles that Khosrowshahi is fighting since successfully pulling off an initial public offering of the company’s shares in May. That IPO valued Uber at $45 a share, a level its stock has traded below for much of the past seven months. 

Despite Khosrowshahi’s skills at addressing some of the cultural problems at Uber, some shareholders are unconvinced about his abilities as a CEO and the pace at which the lossmaking company is making strides to become profitable. 

Moreover, as Uber’s founder Travis Kalanick dumped his shares in the company through a series of selldowns in recent weeks, questions over Khosrowshahi’s management have also flared up, including in this deep dive by The Information.

On Tuesday, there was reason for optimism. Uber made another exit from a market — India — where its food delivery business, Uber Eats, was burning through cash. 

We’ve been telling you for a while that competition among food delivery companies is heating up. In the battle to gain market share, groups have aggressively cut prices, which has eaten into their bottom line and made consolidation in the industry inevitable. 

It has come down to the old animal kingdom trope: eat or be eaten. Uber has opted for the latter by selling its food-delivery business in India to the homegrown market leader Zomato. It comes just months after Uber decided to pull out of the South Korean food delivery market. 

The retreat from India underlies Uber’s willingness to bow out of countries where it sees no path to being a market leader while keeping its fingers in the proverbial pie. 

As part of the deal, Uber will get a 10 per cent stake in Zomato — valued at approximately $350m by analysts — but which Uber itself has valued at $172m.

DD’s take: Financial pressure on Uber and some of its competitors in the food delivery space is likely to lead to more dealmaking. Two markets to watch closely as this unfolds are the UK and the US. 

In the UK, Deliveroo is seeking to secure funding from Amazon to bolster its balance sheet and Takeaway.com  won a bidding war against Prosus to secure Just Eat. 

In the US, attention has focused on a possible sale of Grubhub. But there are four major players including Uber Eats, DoorDash and Postmates. Expect consolidation, one way or another.

Nothing ventured, nothing gained

DD readers may know the venture capitalist Josh Wolfe as one of the fiercest Twitter critics of Elon Musk and the carmaker Tesla. 

“I admit I was wrong on Tesla + the growth story. I thought sales were down — I massively mistook how badly they are down,” he tweeted following Tesla’s third-quarter earnings.

It turns out Wolfe and his business partner, Peter Hébert, have quietly been facing dissenters of their own. 

Nearly a dozen early backers of their $2.4bn venture group, Lux Capital, have complained that the two partners coerced them into an undervalued buyout of their stakes last year, shortly before raising more than $1bn in fresh funding.

The aggrieved investors — who are so close to Hébert and Wolfe that lawyers describe them as “groomsmen and best men at each other’s weddings” — believe Lux is worth at least $100m. Lux instead offered $4m to buy out their future profit interests in a transaction that was approved by a majority of the shareholders.

Lux has stood by the transaction, saying it represented a premium on an outside valuation and was “designed to ensure resources from the carry in future funds are going to compensate active employees”.

At stake are the sizeable profits generated by Lux’s bets on start-ups in nanotechnology and other scientific fields. Last year two of the group’s investments — Auris Health and CTRL-Labs — were sold in billion-dollar deals to Johnson & Johnson and Facebook, respectively.

Read the tale from DD’s Miles Kruppa here.

The ‘Czech sphinx’ keeps circling European retail

At Metro’s annual meeting on February 14, there will be no love lost between the retailer’s longstanding family shareholders and Daniel Kretinsky, below, the Czech billionaire investor who has been circling the company for more than a year. 

The businessman, dubbed the “Czech sphinx”, who has a 29.99 per cent stake in the German company, is going to have a hard time getting anything through at the meeting after Beisheim Group and the Meridian Foundation raised their combined stakes to a de facto blocking majority.

Beisheim, which manages the estate of Metro’s late co-founder Otto Beisheim, and Meridian, which represents the Schmidt-Ruthenbeck family, lifted their joint holding in Metro from 20.6 to 23.1 per cent.

The message to Kretinsky is clear: You can’t do this alone. 

The family shareholders have become a thorn in Kretinsky’s side after they grouped together last year to reject his €5.8bn takeover bid for Metro as too low. In turn, Kretinsky lifted his stake to just under 30 per cent, creating a sort of shareholder stalemate. 

If you’re not familiar with Kretinsky, don’t miss this profile from last year about his transition from buying unloved energy assets to investments in prized retail and media establishments.

The Czech businessman’s 10 per cent stake in French Newspaper Le Monde prompted a shareholder battle, but elsewhere in European retail, Kretinsky has received a warmer welcome. This week he raised his stake in France’s Casino to 5.7 per cent. The troubled retailer’s chief executive and controlling shareholder Jean-Charles Naouri has vowed to give Kretinsky’s camp representation on Casino’s board at its upcoming shareholder meeting. 

Job moves

• BP’s chief financial officer Brian Gilvary will retire in June after eight years in the role. He will be succeeded by Murray Auchincloss in July, who is finance head of BP’s upstream division. More here.

• Adrian Montague will retire as chairman of Aviva this year after almost five years in the role. 

• Airbnb has hired Jesse Stein as global head of real estate. Stein was previously at KHP Capital. 

• K&L Gates has hired Steven Olenick as a corporate partner in the New York office. He joins the from Loeb & Loeb.

• Lazard has hired Garri Jones and Nick James to lead a new venture and growth banking team. They both joined from Numis.

Smart reads

The illiquidity premium Ben Meng, the chief investment officer at the $401bn Californian pension megafund Calpers, has not been shy about his love of private equity, but what if returns from the hugely popular asset class are the same as those for leveraged, mid-cap public equities just without the daily liquidity? (Alphaville)

Vulture funds move in on China’s properties As corporate defaults rise in China, there are a handful of big money managers looking to swoop in and make a profit on the country’s non-performing commercial loans. The likes of Bain Capital, Lone Star and Oaktree have invested some $3bn in deeply discounted loans. (WSJ) + (FT)

Suspicion in the Valley Trade war tensions between the US and China have fuelled a climate of suspicion around Chinese nationals who have made their careers in Silicon Valley. Recent events have prompted many to examine where they stand in their workplace as they face visa uncertainties and a challenging work environment. (FT)

News round-up

Buyout group Melrose considers sale of chunk of Nortek (FT)

Bombardier in talks to combine rail unit with Alstom (BBG)

Carlos Ghosn: I am a victim of double standards and disinformation (FT)

Amundi pays €430m to acquire Sabadell Asset Management (FT)

Chinese group swoops for UK steel trader Stemcor (FT)

CityFibre buys TalkTalk’s FibreNation unit for £200m (FT)

UBS lowers targets after profit falls in 2019 (FT)

Warburg Pincus said to mull deal for wealth manager Quilter (BBG)

US landlords grapple with thousands of store closures (FT)

MSCI acquires Burgiss stake for $190m (FT)

Swiss police suspect Davos plumbers of being Russian spies (FT)