After Uber, Saudi bets big on regional rival Careem

Saudi Arabia continues its asset hungry acquisitions as part of its bid to diversify its economy away from oil, in-line with its much touted Vision 2030 economic plan.

After investing a whopping $3.5 billion in ride-hailing app Uber in June, Riyadh's publically owned telecom company STC has approved the purchase of a ten-percent stake in Careem, the Middle East's answer to Uber, to the tune of $100 million.

This is yet another big investment in ride-hailing apps for Saudi Arabia, where women are not yet allowed to drive. Uber has previously said 80 percent of its passengers in Saudi Arabia are women.

The transaction will be financed by the firm's internal resources, and is conditional on meeting all requirements to close the deal, reported Reuters on Sunday, the start of the working week in the kingdom.

Careem's co-founder Mudassir Sheikha said in September that the company was in talks with potential investors about its latest fundraising round, which would be used to finance its expansion plans.

STC already has a stake in Careem through STC Ventures, an independently managed venture capital fund of which the Saudi telco is an anchor investor.

In May, Careem became one of the first car hailing companies in Saudi Arabia to be awarded a license to operate by the ministry of transport.

Launched in Dubai in 2012 by Sheikha and Magnus Olsson, Careem has expanded across the Middle East, North Africa, Turkey and Pakistan. It has a fleet of more than 90,000 drivers and more than four million users registered through its mobile app.

In May, Careem became one of the first car hailing companies in Saudi Arabia to be awarded a license to operate by the ministry of transport. 

The partnership has been described as part of Saudi Arabia's "Vision 2030", which seeks to develop the Saudi economy and liberalise the kingdom's market away from subsidies and dependence on oil revenues.

In June, Saudi Arabia's Public Investment Fund acquired a stake in Uber, the world's largest ride-hailing app by value. As part of the economic vision, Saudi Arabia is set in an unprecedented move to sell a stake in state oil company Aramco, thought to be worth hundreds of billions of dollars.

Sponsored by the kingdom's powerful deputy crown prince, the Vision 2030 has been hailed an ambitious and long-overdue move, but moves to cut spending and reduce subsidies have faced some backlash from Saudis over rising utilities and fuel costs.