# Banks Passed Up Uber Share Sale on Lack of Data - Bloomberg 11/7



## Michael - Cleveland (Jan 1, 2015)

Banks Passed Up Uber Share Sale on Lack of Data
http://www.bloomberg.com/news/artic...ave-passed-up-uber-share-sale-on-lack-of-data
By Julie Verhage & Alex Barinka - November 7, 2016 - Bloomberg

*JPMorgan, Deutsche said to forgo offering on no financials*
*BofA and Morgan Stanley ended up selling the stock in January*
The potential fees and reputation boost that could come from working on Uber Technologies Inc.'s initial public offering are the stuff of bankers' dreams.

Yet at least two investment banks passed on selling shares of Uber to their high-net worth clients -- shares eventually sold by other banks in January -- because the ride-share company wasn't willing to provide financial details about its business, people with knowledge of the matter said.

JPMorgan Chase & Co. and Deutsche Bank AG both turned down the opportunity to offer their wealthiest clients the option to invest in Uber, said the people, who asked not to be identified because the information is private.

Bank of America Corp. and Morgan Stanley ended up selling the shares earlier this year through those firms' private wealth divisions.

JPMorgan and Deutsche Bank were concerned they wouldn't be able to fill demand for the offering given the lack of specifics, the people said. Deutsche Bank also took into consideration that share sales through banks' private-wealth divisions are unusual, and it hadn't done one before, one person said.

The last such offering of a big technology company was more than four years ago. In that case, Goldman Sachs Group Inc. sold private shares of Facebook Inc. to international clients before the company went public in 2012.

*Long Game*
With a company like Uber, the major banks play a long game of relationship building to be best positioned when the company does pick banks to go public. While the Uber share sale was run through the private wealth divisions, it may still help put the firms in the company's good graces. With the timing of any Uber IPO unclear, banks' willingness to forgo that business is notable.

Before that sale, it seemed like Uber Chief Executive Officer Travis Kalanick and his management team had most of the leverage. For example, the company told bankers if the firms do any business for its biggest U.S. competitor, Lyft Inc., they'd be less likely to be hired, according to people familiar with those discussions.

So far, Kalanick has managed to deflect questions about the timing of the IPO. As recently as last month, he likened Uber to an "early high schooler" being asked to the prom. It's still a little too soon, he insisted.

That reflected some progress from what he'd said a year earlier: "We're like eighth graders; we're in junior high, and someone is telling us that we need to go to the prom."

*High Valuation*
Uber hasn't had any trouble raising money since its founding in 2009, because investors typically want in on a highly valued startup before it goes public and the banks want a shot at a role when it does.

The San Francisco-based company has garnered more than $16 billion in cash and debt since it started more than six years ago, most recently at a valuation of $69 billion. If it were to go public at that level, it would have a higher valuation than almost 90 percent of the companies in the S&P 500 Index.

JPMorgan and Deutsche Bank passed on the opportunity to do business with Uber just as investor sentiment started to change for market-bound technology companies. There was a backlog of closely held Internet companies, with more than 144 valued at more than $1 billion, research firm CB Insights said in a report.

*Path to Profitability*
Colin Stewart, a managing director at Morgan Stanley who oversees tech financing at the bank, said at the time that private placements would no longer be the place to find "very strong valuations with a plethora of investors hanging around the hoop."

Underwhelming post-IPO performance by some technology companies, including payments company Square Inc., didn't help. Investors wanted to see a clear path to profitability.

The 290-page prospectus Morgan Stanley sent to prospective investors before the January sale didn't include Uber's net income or annual revenue. The document did include 21 pages of risks, namely competition, regulatory hurdles and no assurance that the clients would see any return on their investment.

The New York-based bank addressed the lack of data in its prospectus, saying "the development of insights and big ideas is valuable to the investment process, whereas obsession over incremental 'information' flow is not."

Uber initially asked Deutsche Bank to be on the offering because it wanted to sell the stock to international investors, one of the people said.

Demand for the offering was higher from international clients than domestic, according to two people familiar with the matter. There was demand for more shares than were offered, another person said.

Despite passing up on a role in the private offering, JPMorgan advised Saudi Arabia's sovereign wealth fund on its $3.5 billion investment in Uber that was announced in June.

A spokesman for Uber declined to comment. Representatives of JPMorgan, Deutsche Bank and Morgan Stanley declined to comment, while a representative for Bank of America didn't respond to a request for comment.


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## Brooklyn (Jul 29, 2014)

Will read the article later.. can someone put together cliff notes?


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## phillipzx3 (May 26, 2015)

In other words, just because I claim to be worth $60 billion doesn't make it true.


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## Michael - Cleveland (Jan 1, 2015)

phillipzx3 said:


> In other words, just because I claim to be worth $60 billion doesn't make it true.


sounds familiar...
http://www.merriam-webster.com/dictionary/trumpery



  




​
What - too soon?


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## uberdriverfornow (Jan 10, 2016)

Brooklyn said:


> Will read the article later.. can someone put together cliff notes?


In other words, because Uber wasn't allowing the banks to see how much profit Uber was making, or in this case, how much it ws losing, and because there was no guarantee anyone would see a return on their money, the banks weren't going to push it on their customers to invest in.

This confirms exactly what I've been saying and some idiots were previously trying to counter, that Uber does not allow investors to see their financials. This further confirms it. All investors have been investing blind.


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## ChortlingCrison (Mar 30, 2016)

phillipzx3 said:


> In other words, just because I claim to be worth $60 billion doesn't make it true.


Exactly. It's just an illusion.


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## TwoFiddyMile (Mar 13, 2015)

It's huge.
Several of the world's biggest banks are passing on Uber because it's not a safe bet.


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## Brooklyn (Jul 29, 2014)

TwoFiddyMile said:


> It's huge.
> Several of the world's biggest banks are passing on Uber because it's not a safe bet.


To be fair they're not saying it's not safe.. just the banks don't want to put their high profile clients into these investments with no financials lol.


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## Michael - Cleveland (Jan 1, 2015)

TwoFiddyMile said:


> It's huge.
> Several of the world's biggest banks are passing on Uber because it's not a safe bet.


nah - not that big... just interesting - and underscores how so very not-ready-for-prime-time Uber is as far as going public.
Contrary to one poster's insistence here that private investors have invested tens and hundreds of millions of $ into Uber without ever seeing any financial documentation, what we actually see here is that banks each have different standards when it comes to making offerings to their PWM customers. Morgan Stanley had no problem, while JP Morgan, on the other hand, would not sell the product to PWM clients without having audited financials but still was ok with assisting the Saudis in making a $3.5 BIL investment.


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## Brooklyn (Jul 29, 2014)

Imagine how those meetings went

JP Morgan: Hey Uber! Thanks for the call how have you been doing lately with our previous round of a billion dollars in investments?
Uber: great! We're doing amazing!
JP Morgan: that's fantastic! What's our returns looking like?
Uber: -20%! We need another billion! Everything is going as planned!


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## TwoFiddyMile (Mar 13, 2015)

Brooklyn said:


> To be fair they're not saying it's not safe.. just the banks don't want to put their high profile clients into these investments with no financials lol.


They just don't want to get sued.
No one in corporate America talks straight anymore, they can't afford litigation.


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## Brooklyn (Jul 29, 2014)

TwoFiddyMile said:


> They just don't want to get sued.
> No one in corporate America talks straight anymore, they can't afford litigation.


Maybe. But it could also be that they don't know what the financials look like lol.. at this point the valuation has sky rocketed and the investors may look at it as nearing its peak and they don't want to keep investing without knowing what it's making for potentially a smaller yield.


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## TwoFiddyMile (Mar 13, 2015)

Brooklyn said:


> Maybe. But it could also be that they don't know what the financials look like lol.. at this point the valuation has sky rocketed and the investors may look at it as nearing its peak and they don't want to keep investing without knowing what it's making for potentially a smaller yield.


I'll buy that


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## CCW (Dec 25, 2015)

I wish Uber is public already, I so want to sell it short or buy put options.


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## d0n (Oct 16, 2016)

Tons of Silicon Valley traps do this, they run the business to the ground with moronic ideas and practices and attempt to fool investors by denying data.

Activision-Blizzard's standard practice if any of you plays their games.

Investors have grown smarter than the average bear, they hire people to dig all possible data from the company of their choosing.


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## why not (Oct 2, 2016)

Brooklyn said:


> Imagine how those meetings went
> 
> JP Morgan: Hey Uber! Thanks for the call how have you been doing lately with our previous round of a billion dollars in investments?
> Uber: great! We're doing amazing!
> ...


why is that


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## Mars Troll Number 4 (Oct 30, 2015)

CCW said:


> I wish Uber is public already, I so want to sell it short or buy put options.


Na don't sell short, just sell right before uber's first profit statement is due.


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## Brooklyn (Jul 29, 2014)

why not said:


> why is that


Why is what


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## Flarpy (Apr 17, 2016)

Ponzi schemes don't usually release their financials.


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