Ride sharing company turned towards the leveraged loan market

The ride sharing company is moving to the leveraged loan market and is giving the debt instead of their shares, this shows that the app based company can increase more revenue without diluting the holdings provided the investors. The company is now turning into a new source for money in exchange for something apart from the equity. The ride sharing company which is spending more in India and China to beat their local competitors Ola and Did Chuxing is not short of money but is short of the equity. And the company’s CEO said that they have lost one billion dollars in China, which is because of the debt investors and not the company. So a company that has to pay the loans has to make more rather than losing it.

The company, which plans to become a global giant requires more cash inflow, but selling the equity is a bit costly for the ride sharing company, so they are planning to turn to the leveraged loan market. Sources said that the company hired Barclays and Morgan Stanley to sell the leverage loan of one billion dollar to two billion dollars to the institutional investors. The experts said that the leveraged loan is similar to the junk bonds, which are of high risk but they yield higher returns, so if the company is planning to sell a debt they have to pay back for that debt. To increase the company’s revenue they are trying to hire more drivers to work for them, so they launched an auto financing scheme. Sources close to the ride sharing company said that they will raise fifteen million dollars from the equity and debt.

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