Meru Cabs Raises $25M from Brand Capital

Brand Capital, the investment arm of Bennett, Coleman and Co. Ltd (BCCL), has invested $25 million in taxi operator Meru Cab Co. Pvt. Ltd.

The company plans to raise an additional $75 million as part of its $100 million fund-raising plan. In the last round, in March 2015, it raised $50 million from existing investor India Value Fund.

Sixty-seventy per cent of the money will be used for advertising and providing user incentives which would include discounts, loyalty schemes and providing quality service, as per LiveMint report. Also, the firm is looking to have 15-17% of the total market share that will make it a $1 billion company by 2022.

Meru Cabs which was launched in 2007 as an air-conditioned radio cab service, now competes with newer rivals such as Uber and Ola (ANI Technologies Pvt. Ltd) that are backed by deep-pocketed investors. Ola plans to raise $300-400 million and Uber raised a massive $5 billion, with its Indian arm expected to receive a significant part of the money. Uber had pledged to pump $1 billion into India in July last year.

Meru currently operates in 23 cities and has an operational fleet of 20,000 taxis, 5,000 of which are company-owned. And the firm is looking to increase the fleet by 15-20% over the next one year and will own 25% of the inventory. It wants to be present in 45 cities by end of 2018.

India’s organized taxi-hailing market, presently at $1.2 billion, is estimated to reach $15 billion by 2022, presenting an enormous opportunity for growth, According to company estimates. Meru is doing everything to tap into the potential of this large market.

It has launched the carpool and ride-share services last year, along with a cheaper taxi service, Meru Genie.

Meru has about 4.5 million users and are looking to clock Rs.850 crore in revenue in the current financial year. The company also launched a specialized service for differently abled and elderly commuters called Meru Enable, a booking system with Facebook’s Messenger Bot, and a taxi service only for women in Delhi.

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Uber In Talks To Acquire India's Meru Cabs

The organized taxi service business is seeing a lot of action off late. Just days after Ola’s acquisition of Taxi For Sure, the infamous US based taxi service Uber is in the midst of talks of buying India based Meru cabs. Uber has an aim of increasing its presence in India by acquiring Meru.

According to some sources, Meru is expecting a valuation of $400 million from Uber and the deal hasn’t been sealed yet. Uber, a $40 billion US based company, is eyeing a majority stake in the Indian radio taxi company.

Currently, India Value Fund Advisors (IVFA) has a 80 percent stake in Meru Cabs and it might want to continue holding a minority stake in the company post its deal with Uber is finalized. The acquisition deal could involve a stake sale by IVFA and a part of this could be through fresh equity issuance in order to infuse some cash into Meru Cabs.

According to some source, IVFA was looking to monetize its share in Meru Cabs for a long period of time. It had considered various options for the same and even thought of an Initial Public Offering. But with Ola acquiring Taxi For Sure and the competition in the taxi business heating up, Uber could soon materialize its deal with Meru Cabs.

Uber In Talks To Acquire India's Meru Cabs

The organized taxi service business is seeing a lot of action off late. Just days after Ola’s acquisition of Taxi For Sure, the infamous US based taxi service Uber is in the midst of talks of buying India based Meru cabs. Uber has an aim of increasing its presence in India by acquiring Meru.

According to some sources, Meru is expecting a valuation of $400 million from Uber and the deal hasn’t been sealed yet. Uber, a $40 billion US based company, is eyeing a majority stake in the Indian radio taxi company.

Currently, India Value Fund Advisors (IVFA) has a 80 percent stake in Meru Cabs and it might want to continue holding a minority stake in the company post its deal with Uber is finalized. The acquisition deal could involve a stake sale by IVFA and a part of this could be through fresh equity issuance in order to infuse some cash into Meru Cabs.

According to some source, IVFA was looking to monetize its share in Meru Cabs for a long period of time. It had considered various options for the same and even thought of an Initial Public Offering. But with Ola acquiring Taxi For Sure and the competition in the taxi business heating up, Uber could soon materialize its deal with Meru Cabs.