Careem CEO, Mudassir Sheikha shows the logo of the company's delivery service Careen NOW on his mobile at the company headquarters in Dubai, UAE December 13, 2018. Picture taken December 13, 2018. REUTERS/Satish Kumar
Careem, founded in 2012. won a tender for the project ahead of four other competitors, including Uber © Reuters

Dubai is to launch a company with Careem, the regional rival to Uber, to manage the ride-hailing system for all taxis operating in the Gulf’s commercial hub.

The emirate’s transport authority said on Sunday it would be the world’s first partnership between a government regulator and a private ride-hailing app. Dubai, like other regulatory authorities, has clashed with fast-growing ride-hailing companies challenging the dominance of traditional taxi services.

Dubai-based Careem, valued by bankers at about $2bn in its last fundraising round, said it would have a 49 per cent stake in the joint venture, which would manage e-hailing systems and online payments for almost 11,000 taxis.

The service will launch in April 2019. Dubai taxis, which are owned by the government and major business families in the emirate, will still collect passengers from the streets.

Existing ride-hailing services for about 6,500 limousines in the emirate, which is dominated by Careem and Uber, would continue as normal, the regulator said.

Mattar Al Tayer, director-general of Dubai’s Roads and Transport Authority, said the partnership would increase efficiency through better accessibility to vehicles, and would also reduce waiting times.

“The RTA intends to leverage the taxi sector in Dubai,” he said. “E-hail has become the most effective tool for matching supply with demand and offering clients a smooth experience in obtaining taxis.”

Careem said the venture could be expanded to include other transportation services, such as buses, as Dubai seeks to extend its regional leadership in technology innovation of government services.

It will share start-up costs with the RTA and its revenues will be derived from a fixed booking fee per ride.

Careem, which was founded by former McKinsey consultants in 2012, won a tender for the project ahead of four other competitors, including Uber.

Uber, which faces growing regional competition from rivals, had held talks to take over Careem, people aware of the negotiations said in July, but these have since fizzled out. The two groups compete in most big cities in the Middle East, north Africa and Pakistan.

“We remain committed to being a true partner to Dubai for the long term,” said Uber.

Careem’s backers include Chinese ride-hailing group Didi Chuxing, German car manufacturer Daimler and the holding company of global investor Prince Alwaleed bin Talal, who was detained in last year’s anti-corruption crackdown in Saudi Arabia.

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