Radio taxi company Meru Cabs has recently raised Rs 300 crore ($50 million) from its existing investor India Value Fund Advisors (IVFA), a senior IVFA executive told VCCircle.
“The investments will be used for growth; since the entire industry is growing really fast, we need to maintain market share,” said Vishal Nevatia, chief executive officer and managing partner at IVFA. The taxi firm is also open to acquisitions, he said, adding that other investors are likely to infuse $100 million into the company within a month or two. “A few hedge funds and private equity firms are in advance stages of discussions,” Nevatia said.
The development was first reported by Business Standard.
The capital infusion reflects growing investor interest in the taxi segment. Last year, Ola Cabs raised a large Series D round where Japan's SoftBank led a $210 million investment in the venture. Existing investors Tiger Global, Matrix Partners and Steadview Capital also participated in the round. Recently, Ola acquired TaxiForSure for $200 million.
IVFA earlier infused $75 million into Meru since 2006. Last year some media reports had stated that IVFA, which owns about 80 per cent of stake in Meru, is looking to exit its eight-year-old investment in the taxi firm. There have also been reports that Uber, which recently raised $1.6 billion in convertible debt from global investment bank Goldman Sachs’ wealth management clients, is in talks to acquire Meru.
Meru has come out of its bad phase after it moved on to pursue an asset-light strategy around three years ago. Although it boasts of being one of a few government approved radio taxi service providers, it has seen the likes of Ola disrupt the market without piling on cars in their garages.
It recently began a Meru Eve service for women passengers in Delhi, with 50 cabs owned by Meru. The company has a fleet of about 12,000 cabs.
(Edited by Joby Puthuparampil Johnson)