Gulf-based on-demand cab service Careem has raised $60 million in its third round of financing, the company announced on Tuesday.
The funding will go towards “enhancing and deepening Careem’s presence in new markets”, the company’s managing director in Pakistan Junaid Iqbal said, adding that the company plans on rolling out a major operation in Pakistan over the next year.
Careem is already operational in Lahore and will be launching in Karachi soon. The company serves 20 cities across the Arabian Gulf, North Africa and Pakistan.
With international on-demand cab service Uber set to launch operations in Pakistan, it will be interesting to see how the on-demand market takes shape in the coming months and years.
More importantly, how does Careem plan on tackling the San Francisco-based transportation giant?
Uber, which is reportedly worth $60 billion to $70 billion, is planning onraising another $1 billion in new venture capital, a move that, according to The New York Times, could make Uber the world’s most valuable private start-up.
But Iqbal says Careem has differentiated itself significantly and will continue to localise the service over the next 18 months, with a new feature introduced every month or two months. He wouldn’t say what these features could be, but enumerated the ways Careem already differs from Uber. Or, more precisely, how it differs from Uber’s international operations, since the US company hasn’t launched operations in Pakistan.
In addition to using an app to request a ride, Careem users can simply call a number or use the company’s website, something Iqbal says is an effort to localise the service. Careem also allows users to pay cash and has corporate invoicing options, and allows for bookings for a later time and repeat booking, e.g. if you travel the same route every day.
Carrying on with the localisation ethos, Iqbal adds that even the investors of the company come from the countries the service operates in, such as Saudi Arabia and the UAE. But he’s caught off-guard when asked if there are Pakistani investors in the mix. However, he offers that the Abraaj Group, principle investor in the $60m funding round, has “a significant footprint in Pakistan”.
When asked if Careem would have tiered services, something along the lines of uberX or UberLUX, Uber’s low-cost and luxury options respectively, Iqbal said there will be multiple options, but they will only be introduced once the Lahore and Karachi markets ‘mature’. For now, there’s only the “business” option being offered in Lahore, which is usually a Toyota Corolla sedan. This will also be the only option when the service first starts operating in Karachi.
With Uber horror stories emerging from the US, India and elsewhere, there are legitimate concerns over security with other services based on that model. Since the drivers are contractors, not employees, the companies cannot easily be held responsible for the drivers’ misconduct.
Iqbal says Careem has verification protocols in place – verification of ID cards, driver’s licence, residence and references – and that these protocols will be expanded. He adds that the service shares information about the driver and the vehicle with the user even before they get into the car, and that trip can be tracked online throughout the course of the journey. He draws parallels with the traditional taxi drivers, “Do we even know their name?”
When asked if the company had similar safety protocols for drivers, who they call ‘captains’, Iqbal said the company was working on it. “For now we are ensuring that we hire people who have been in the business for a while,” i.e. experienced drivers who can handle difficult situations that novices can’t. He adds that there are weekly training sessions for drivers.
If it’s part of anyone’s job description to be optimistic about the service, it has to be Iqbal’s. He says the Careem’s business model, and by extension Uber’s, is set to change the transport industry.
“We have leapfrogged the public transport system,” he said. “You can summon a ride at the click of a button.”
“The beauty of the model is that it can be scaled up quickly,” he added. “As the service grows, it becomes more efficient
Says govt has been making all the right decisions; calls KSE one of the better performing stock exchanges PHOTO: FILE
The CEO of Citi for Europe, Middle East and Asia has said he expects “great economic growth” in Pakistan over the coming years.
Speaking to journalists during his visit to the Karachi Stock Exchange (KSE) on Thursday, Citi executive James C Cowles said he is “very optimistic” about economic opportunities in Pakistan. “We think the government has been making all the right decisions. GDP growth is 4.5%-5.5%. We think that’ll continue over the coming years,” he said.
Calling KSE one of the better performing stock exchanges globally, Cowles said Citi foresees “a lot of upside” going forward. “When you look at the market capitalisation versus GDP, it’s still very low,” he said. Market capitalisation currently hovers around 27% as opposed to 46% before the 2008 financial crisis.
“There’s a lot of upside both in terms of (price-to-earnings) multiple expansion as well as earnings expansion because of GDP growth,” Cowles said.
Citi sold its consumer banking operations in Pakistan three years ago. Habib Bank acquired its consumer portfolio at a transaction value of approximately Rs2 billion in 2012. Since then, Citi has been involved in investment banking and corporate finance in Pakistan. Citi’s clientele in Pakistan, according to Cowles, consists of global companies that operate here besides local financial institutions and public-sector companies.
Replying to a question about the banks’ conservative lending policy despite a low benchmark interest rate, the Citi executive said banks should provide financing for all sectors of the economy.
“We are involved with the public sector, but our primary business in Pakistan is providing funding to local and multinational companies and local financial institutions, so they can have liquidity that they can lend on. We are growing our balance sheet,” he said.
The international credit rating agency Moody’s has upgraded the outlook for Pakistan’s banking system to stable from negative, reflecting the improvement in the country’s economic growth prospects.
According to the latest financials of Citi Pakistan available on its website, its earnings clocked up at Rs1.6 billion in the first quarter of 2015, up a massive 238% from the same quarter of 2014. However, the extraordinary increase in earnings owes its existence to the gain on the sale of securities (Rs1.6 billion) during the quarter. Its net assets amounted to Rs11.8 billion on March 31, which makes it the 19th largest bank operating in the country.
Citi was one of the pioneers of consumer banking in Pakistan. From car financing to credit cards, Citi played a role in popularising such products back in the 1990s. But shrinking profitability in consumer banking led the bank to decide against staying in the segment later on.
From National Bank Chairman Muneer Kamal to Bank Alfalah CEO Atif Bajwa, Tameer Microfinance Bank CEO Nadeem Hussain, former finance minister Shaukat Tarin and former prime minister Shaukat Aziz, Citi Pakistan has produced a large number of bankers who went on to have illustrious careers after leaving the global bank.
Replying to a question about the future course of action for Citi Pakistan, Cowles said his bank will remain focused on the institutional banking market within Pakistan. “That’s where our expertise is. That’s where we think we provide value in terms of what we can offer to our clients and the country,” he said.
China and Pakistan are best iron brothers, good friends and strategic partners, Fan Changlong said. PHOTO: EPA
ISLAMABAD: Beijing will back Pakistan to ensure the security of a new special economic corridor providing access to the port of Gwadar that aims to create direct links between China and the Arabian Sea, a top Chinese general has pledged.
Fan Changlong, vice chairman of China’s Central Military Commission, told army chief General Raheel Sharif on Thursday that Beijing looked forward to close cooperation “to ensure proper management and security of CPEC,” according to ISPR.
Top Chinese military official arrives in Islamabad
The China Pakistan Economic Corridor is an ambitious $46 billion project giving Beijing greater access to the Middle East, Africa and Europe through Pakistan, via a new highway to Gwadar port on the Arabian Sea.
Fan’s visit, the first by a Chinese general of his seniority in 11 years, came two days after Pakistan handed hundreds of hectares of land over to China for development of a free trade zone in Gwadar as part of the project.
The development is part of China’s ambition to expand its trade and transport footprint across Central and South Asia while countering US and Indian influence.
Economic corridor: Pakistan, China agree on four-layer security
India has expressed wariness about the project in the past, though analysts told AFP recently that concerns would only arise if there are “defence related matters”.
Fan, who headed a high level Chinese military delegation, on Thursday met Sharif at Pakistan army headquarters in Rawalpindi to discuss “matters of mutual interest, regional security, steps for regional stability and enhanced bilateral defence collaboration”, the statement said.
Fan said China “deeply appreciates” Pakistan’s efforts to eliminate militancy, particularly by the East Turkistan Islamic Movement (ETIM), which Beijing says is active in China’s Xinjiang region, on the border with Pakistan.
China-Pakistan corridor: Nawaz to break ground of western route ‘soon’
Xinjiang – the homeland of China’s 10 million Uighurs, a mostly Muslim minority – is sporadically hit by deadly violence. Beijing has claimed that ETIM militants are hiding in Pakistan, a claim that has been supported by local security sources.
“China values the efforts of Pakistan Army in fighting ETIM,” Fan said, adding that China and Pakistan are “best iron brothers, good friends and strategic partners”.
Fan also met with Prime Minister Nawaz Sharif in Islamabad Thursday, with Sharif lauding Islamabad’s friendship with Beijing as a “cornerstone” of its foreign policy.
China wishes to shift industries to Pakistan: Iqbal
The government of Balochistan handed over about 280 hectares of a 923-hectare swathe of tax-exempt land in Gwadar on Wednesday that Beijing will develop under a 43-year lease.
The rest of the land will be handed over under the agreement with the public China Overseas Port Holding Company “soon”, senior government officials told AFP.