TABcab in talks to raise Rs 600 cr for expansion

The largest taxi operator in Mumbai runs 2,800 taxis in Mumbai, it has never raised money from private investors

TABcab, the largest taxi operator in Mumbai, has finally entered the deal market. TABcab is in discussions with private equity (PE) investors for raising $100 million (Rs 600 crore) by diluting a minority stake.

According to people in the know, TABcab will use the funds for expansion into Delhi and Chennai, where it is in discussions to acquire a leading taxi operator.

Buyout talks with the Chennai-based operator were in initial stages, sources said.

Though other taxi operators and aggregators like Meru Cabs, Ola Cabs, Easy Cabs, Mega Cabs and Taxiforsure have raised funds from PE firms, TABcab, which runs 2,800 taxis in Mumbai, has never raised money from private investors.

Among radio cabs, TABcab is the largest operator in Mumbai today, with a five per cent market share.

TABcab is run by SMS Taxi Cabs, a subsidiary of SMS Infrastructure, an infrastructure group promoted by Nagpur-based Sancheti family.

It entered the Mumbai market in 2010, when SMS Infrastructure bought 4,000 taxi permits for Rs 2.61 lakh each during an auction by the state transport department.

So far, SMS Infrastructure has deployed about Rs 700-750 crore for buying permits, as well as fleet.

Confirming the development, Jagdish Purohit, managing director, TABcab, said, "We are in early stages of discussions with a clutch of PE investors.

"The money will be used for expanding services in new markets."

He refused to share financial details of the deal.

About 78 per cent of Mumbai's taxis are the traditional black-and-yellow cabs. Organised players together have 22 per cent market share.

Meru Cabs, in which PE major India Value Fund Advisors (IVFA) holds a controlling stake, has four per cent market share, Ola Cabs two per cent, and Easy Cabs and Mega Cabs one per cent each.

In Mumbai, Meru Cabs has 2,050 taxis, Ola Cabs 1,000 and Easy Cabs 800, according to a recent report by CLSA.

Unlike other taxi operators like Meru, which shifted from owned cabs to driver-owned cars in 2012, TABcab works on own-the-fleet model.

After the Delhi rape in an Uber cab, businesses of all taxi aggregators have come under a cloud. Owned fleet services will be less affected, experts believe.

India's taxi market, which is growing at 20 per cent annually, has been on the radar of global investors for a while.

According to data from VCCedge, Indian taxi service operators have raised $347 million since 2012 through 21 transactions.

The largest-ever funding of a taxi operator took place last year, when Ola Cabs had raised $210 million (about Rs 1,260 crore) in October from a group of investors led by Japanese telecom and media group SoftBank.

Ola Cabs leads the table, with a total PE funding of $280 million from Tiger Global, Matrix Partners India, and Steadview Capital.

Meru Cabs, the second-largest taxi operator as well as the first operator in Mumbai, received Rs 50-crore funding from IVFA in 2006 and a second round of undisclosed funding later.

IVFA holds about 85 per cent in Meru Cabs. India's 600,000 cab market earns yearly revenues of Rs 11,000 crore.
ALL EYES ON THE FARE TAXI

• 2,800 cabs TABcab runs in Mumbai. It has never raised money from private investors
• It is the largest taxi operator in Mumbai
• Once funds are raised, TABcab will use these for expansion into Delhi and Chennai