Uber Technologies Inc. hired Goldman Sachs Group Inc. to sell more than $1 billion of convertible debt to the bank’s wealth management clients, according to people with knowledge of the matter.
Goldman Sachs clients are getting a chance to buy a six-year bond in the mobile car-booking company that will convert into equity at a 20 percent to 30 percent discount to Uber’s valuation at the time of an initial public offering, said the people, who asked not to be identified because the details are private.
Goldman Sachs isn’t investing its own money in the debt, said the people. The convertible bond carries a coupon that increases over time if San Francisco-based Uber hasn’t gone public within 4 years, said the people.
Fortune reported Goldman Sachs’s mandate to sell Uber debt to private clients earlier this week. The work doesn’t guarantee that Goldman Sachs will have a role in an Uber IPO, said the people. Representatives for Goldman Sachs and Uber declined to comment.
A convertible debt deal would give more financing firepower to Uber, which is the most highly valued U.S. technology startup and has disrupted taxi and limousine industries worldwide by letting people book rides on their smartphones.
Uber, which was valued at $17 billion in June and has raised more than $1.2 billion in equity since 2009, is in separate talks to raise an additional $1 billion or more in equity from existing and new investors at a valuation of as much as $40 billion, people close to the situation said last week. That would put Uber at almost four times the market capitalization of rental-car company Hertz Global Holdings Inc.
Goldman Sachs and Uber have a longstanding relationship. The bank is an investor in Uber. Earlier this year, Uber also hired Cameron Poetzscher from the Wall Street firm to head corporate development.
Uber, founded in 2009 by Chief Executive Officer Travis Kalanick and Garrett Camp, has expanded to more than 220 cities worldwide.
The convertible debt discussions and equity funding talks show that investors’ appetite for Uber hasn’t been affected by remarks made last month by Senior Vice President Emil Michael about prying into journalists’ private lives. Uber has hired law firm Hogan Lovells to conduct an internal review of its data- privacy policies.