Benchmark sold off $900 million of its Uber stock but wanted to sell more

Bill Gurley

Benchmark is selling nearly 15% of its stake in Uber to Softbank for about $900 million.
The deal is part of Softbank's effort to build up a big stake in ride-hailing giant Uber, by buying shares from existing shareholders and from Uber itself.
Softbank offered to buy shares from existing shareholders at a steep discount to Uber's most recent private valuation. Even so, shareholders offered to sell Softbank more shares than it wanted to buy, including Benchmark.

Benchmark, one of Uber's largest shareholders, offered to sell a quarter of its stake to Japan's Softbank and in the end sold about 14.5% for about $900 million, Recode reports citing anonymous sources.

The sale was part of Softbank's huge investment into Uber. Softbank is buying up a 15% stake mostly by buying shares from existing shareholders at $33 a share, a steep 30% discount from their last valuation. Softbank has also invested $1.25 billion of cash directly into the company at the last full share price.

There has been much hand-wringing about this deal. Softbank told Uber that if it didn't sell it a big enough chunk of the company, the deal would be off and it would turn around and back Lyft, Uber's major rival, instead. Softbank has been backing Uber's rivals in other parts of the world.

The tender offer was said to be conducted blind, meaning that shareholders were not allowed to tell each other if they were selling or how much. The risk was that shareholders wouldn't offer enough of their shares at the discounted price to satisfy Softbank.

But in the end, investors were tripping over themselves to cash out at that price. Even ousted CEO Travis Kalanick, who had previously boasted that he never sold any shares, is selling about one-third of his stake worth, about $1.4 billion, Bloomberg reports.

Benchmark had previously said it thought Uber could be worth $100 billion. Before selling, it owned about 13% of the company.

While this sounds like these shareholders are losing money, the truth is Uber sold tens of millions of shares in its early rounds for less than $15 a share and tens of millions of shares in even earlier rounds for less than $2 a share, according to PitchBook, a database that tracks venture-capital deals. So at $33 a share many are making a considerable profit.

Benchmark did not immediately respond to a request for comment but declined comment to other media outlets.

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