Lyft is said to explore IPO as it raises $1 bn

In an escalation of its ride-hailing war against Uber, Lyft has begun to explore going public in 2018 and is trying to strengthen its position by raising more capital, including $1 billion in new financing led by an investment arm of Google’s parent company.

Lyft has had talks with investment banks about an initial public offering next year, according to two people briefed on the discussions, who asked to remain anonymous because the conversations are confidential. Lyft has not decided which bank may become its lead underwriter for an IPO, the people said. To bolster itself ahead of any public offering, Lyft on Thursday said it had raised $1 billion in financing led by CapitalG, a venture investment arm of Google’s corporate parent, Alphabet. The funding values Lyft at $10 billion before the introduction of new capital — a significant jump from the firm’s last valuation of $6.9 billion.

The new investment further complicates the convoluted web of financial relationships in the ride-hailing industry, where companies like Lyft and Uber have hauled in enormous amounts of funding from firms that often put money into competing firms.

But the financing also gives Lyft a new and formidable partner in Alphabet. As part of the deal, David Lawee, a venture partner at CapitalG, will take a seat on Lyft’s board of directors. The investment round, which includes other undisclosed participants, remains open.

“Less than 0.5 per cent of miles travelled in the US happen on ride-share networks,” John Zimmer, president of Lyft, said in a statement announcing the deal. “This creates a huge opportunity to best serve our cities’ economic, environmental, and social futures.” 

Alphabet’s investment ratchets up the high-stakes battle for supremacy in the ride-hailing industry.

Uber, which is valued at nearly $70 billion and is the industry’s dominant force, has been grappling with scandals over its corporate culture and business practices. A group of investors forced out Travis Kalanick, Uber’s co-founder and former chief executive, earlier this year over concerns that he was not fit to lead the firm. Uber’s new chief, Dara Khosrowshahi is now trying to learn from its missteps while pursuing his goal of taking the firm public in the next 18 to 36 months. It is nearing a deal to sell a significant stake of itself to SoftBank, a Japanese conglomerate, which would include about $1 billion in new capital.

©2017 The New York Times News Service