Watch: How will Uber Freight’s newest acquisition help push things forward?
Uber Freight has completed its acquisition of Transplace, a $2.25 billion deal that also involved Uber Freight taking on another investment of more than a half-billion dollars.
The completion of the Transplace deal had been expected in the fourth quarter, so its timing was expected. What wasn’t expected was that a little more than a year after it took on a half-billion-dollar investment from Greenbriar Equity Group, it would take on an even bigger investment than the cash that Greenbriar put into the company.
The latest investment in Uber Freight is $550 million. Investors in this transaction are Abu Dhabi Growth Fund, D1 Capital and GCM Grosvenor.
D1 has been involved in logistics investments previously. Earlier this year, it was part of a group that invested $200 million in Misfits Market, an online grocer. It also is a significant investor in GoPuff, a digital delivery service that also took on new money this year.
GCM Grosvenor is an asset management company with $70.5 billion under management as of Sept. 30.
The Abu Dhabi Growth Fund was just established in July. It was set up by the Abu Dhabi Developmental Holding Co. PJSC (ADQ). Uber Freight is one of its first investments.
The investment and the closing of the Transplace deal are not coincidental. Uber Freight said in a prepared statement that the money taken on from the three investors provided partial financing for the deal.
The goal behind the Transplace acquisition by Uber Freight was always to bring a platform that primarily services shippers in with a digital brokerage.
Transplace is a provider of managed transportation services through its transportation management systems. Its function is to take the needs of a shipper to move freight into the marketplace and work it through the Transplace TMS.
“Today it is more essential than ever to bring shipper and carrier networks closer together through a fully connected and transparent logistics ecosystem that addresses the evolving supply chain needs of all stakeholders,” Frank McGuigan, CEO of Transplace, said in a prepared statement. “The acquisition marks a turning point in the industry and a new era of delivering trusted outcomes by coupling best-in-class logistics platforms and managed services with the world’s premier shipper and carrier networks to dramatically increase value for customers.”
Prior to the deal closing, Moody’s Investors Service gave an overview of Transplace through the prism of its debt levels. It said in its analysis that Transplace’s debt to earnings before interest, taxes, depreciation and amortization ratio on June 30 was approximately 4.5X, down from 5X last year. The ratio is expected to fall toward 4X by the end of 2021, the analysis said.
When Greenbriar made its investment, Uber Freight was valued at $3.3 billion. A few months later, an analysis by Morgan Stanley put the value at $3.5 billion.
The valuation for the company by the three new investors was not immediately available.
In reporting its operating results for the third quarter, as part of the release of earnings from the broader Uber parent, the company said Uber Freight had $402 million of revenue in the third quarter, compared to $348 million in the second quarter and $290 million a year ago.
On the company’s earnings call, CEO Dara Khosrowshahi said the strong report should “put to rest the many questions we’ve gotten, not always unfairly, about whether the unit economics of this business work.” He gave no indication that Uber Freight was looking to take on a significant new investment.
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