Uber Technologies have been expanding in the Western and Eastern world aggressively. The company has been trying to dominate the Indian and Chinese markets where rivals with similar services are well established and big threats.
In a bid to expand and upgrade their services, Uber technologies recently raised $1.15 billion of leveraged loan. The leveraged loan market has been a portal to more established and conventional business models. However, in a first, Uber will now be able to take advantage of ultra low interest rates of the leveraged loan system keeping venture capitalists happy since they will no longer be diluting their shares to raise funds.
In leveraged loans, investment banks arrange and syndicate among institutional investors a loan to a company with significant existing debt. The leveraged loan market saw volume of $783.3 billion in 2015, according to Thomson Reuters data, more than 13 times venture capital investments last year.
Uber has arranged a network of four banks to arrange the loans and will be paying an interest of about 5% , the Wall Street Journal has estimated. While Uber will be investing this money to upgrade their R&D department and infrastructure, it is good news for consumers and people in Uber’s target countries of India and China.