By Clara Denina and Simon Jessop
LONDON (Reuters) - Uber Technologies (NYSE:UBER) Inc Chief Executive Dara Khosrowshahi sought to persuade money managers in London that the loss-making ride hailing firm's growth plans justified a valuation of up to $91.5 billion in an initial public offering (IPO).
In the ballroom at Claridge's, the five-star hotel in London's wealthy Mayfair district, over 100 investors listened on Monday to Khosrowshahi and Chief Financial Officer Nelson Chai talk about the company's plans to expand their food delivery business and venture into other new business areas like shopping.
Uber is trying to show investors that it can shift from being simply a ride-hailing service to a technology platform for services ranging from delivering groceries and take-away meals to organizing freight transportation.
"While they didn't call themselves Amazon (NASDAQ:AMZN), they made several references to their platform and how they intend to build that out," said one investor who attended the hour-long presentation but declined to be named.
Uber reported on Friday it was aiming for a valuation of between $80.5 billion and $91.5 billion, less than the $120 billion investment bankers told the company last year it could fetch.
It also disclosed it suffered a loss of around $1 billion on sales of roughly $3 billion in the first quarter of 2019.
Uber has cautioned in its IPO filing that it may never make a profit and some investors at the roadshow said the ride-hailing industry faces hurdles such as increased regulation and local minimum wages that could hamper profitability.
"It's going to be much more difficult and cumbersome to extract profitability," said another investor who attended the roadshow. Uber's lower valuation target follows the poor performance of smaller rival Lyft Inc (NASDAQ:LYFT), whose shares are down around 20 percent from when the company listed last month.
Lyft was the first U.S. ride-hailing company to go public and one challenge investors grappled with was how to value a company with no clear peer.
The second investor who attended the Uber roadshow said people should look at the airline industry, as opposed to other technology companies, when assessing Uber's business model.
"If you think about airlines, there's a lot of barriers to entry and there are capital intensive barriers, but ultimately airlines are not massively profitable," the investor said.
A spokesman for Uber declined to comment on the investor comments.
DISCREET CAMPAIGN
After widespread media coverage of Lyft's IPO marketing, Uber appears to be aiming for a more discreet roadshow.
Investors were not told the presentation's venue until around three hours before it began, and attendees all had to show government-issued identification before being granted admission with media firmly barred.
One investor, who declined to be named like the others, complained that the event was relatively brief, saying they did not have a chance to ask many questions.
A source working on the roadshow said the presentation - the only one for investors outside of the U.S. - lasted only around 10 minutes, with another 50 spent on questions and answers.
As well as growth and cost-control, several questions focused on the company's culture and business practices following a string of embarrassing scandals have included sexual harassment allegations, a massive data breach that was concealed from regulators, use of illicit software to evade authorities and allegations of bribery overseas.
In London, the transport authority refused to renew Uber's license in September 2017 citing safety concerns, though it was granted a 15-month probationary operating license last June, telling a court it had improved its procedures.
"The CEO was very impressive and their governance is much better now, they've done so much in a short space of time," said the first investor. Khosrowshahi took the role in Aug. 2017, succeeding co-founder Travis Kalanick.
The Uber IPO, which is expected to price on May 9 according to people familiar with the matter, would rank as the largest in the United States since that of Chinese e-commerce giant Alibaba (NYSE:BABA) Group Holding Ltd in 2014.
The Uber IPO is being led by Morgan Stanley (NYSE:MS), Goldman Sachs & Co (NYSE:GS) and Bank Of America Merrill Lynch.