Meru Cabs to raise $150 million

Taxi service provider Meru Cabs is planning to raise $150 million (around ₹950 crore) from existing and new investors in a bid to expand its services to new regions.

The company is planning to raise this fund in two tranches. In the first, Meru plans to raise $50 million from its existing private equity investor India Value Fund Advisors (IVFA), CEO Siddhartha Pahwa told BusinessLine .. The second tranche of $100 million will come from other PE firms.

IVFA has so far invested $75 million in Meru. Company executives said both these fund-raising plans are in advanced stages of completion.

With this, Meru is hoping to get fresh ammunition in an increasingly competitive market. Ola, which recently acquired TaxiForSure for $200 million, and Uber, which is increasing its foorprint in India, are Meru’s main competitors.

“We are currently present in 20 cities and with the fresh funding, we can expand our reach in both tier I and tier II cities,” Pahwa said. Meru is looking to launch taxi services in Coimbatore, Cochin and Lucknow in a month. The company currently adds 2.5 lakh new customer every month.

While this is slower in pace compared with Ola, which has a presence in 85 cities after the TaxiForSure acquisition and books 2 lakh rides a day, Meru has a strong revenue momentum. According to the CEO, the company is expecting to grow 50 per cent to ₹600 crore this financial year, up from ₹400 crore in 2014. Additionally, the company had reported a net profit of ₹3 crore last year.

These funds will be used to compete against both economy and premium cab services that competitors provide. Meru Genie, its cheaper cab hailing service, is growing at 50 per cent for the last six months, said Pahwa. The company also claims that by using technology, the average number of trips of its drivers is 12, which is 30 per cent more than what its competitors offer.

The taxi market in India is expected to grow to $28 billion by 2020, according to a study by Morgan Stanley.

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