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Net Net: Promoting innovation and managing change

Tiger hedge fund family backs Uber for $100B-plus IPO

Uber valued at $40 billion

A small group of elite investors are behind Uber's latest $1.2 billion fundraising effort and believe the company is set for a massive initial public offering in the next few years.

The new investors, according to a person familiar with the situation, believe Uber will hold an IPO in the next one to three years at a valuation of more than $100 billion. The current fundraising values the company at about $40 billion.

The leaders of the money raised this week are a group of hedge fund firms with ties to Tiger Management, according to the person. The hedge funds, including Glade Brook Capital Partners, Lone Pine Capital and Valiant Capital Partners, provided the "bulk" of the $1.2 billion according to the person, and Glade Brook, a $1.5 billion firm founded by Paul Hudson, led the round.

The rest of the capital came mostly from sovereign wealth funds and mutual funds. Iconiq Capital, a large, private money manager for ultrawealthy clients like Facebook's Mark Zuckerberg and Sheryl Sandberg, invested as well, according to the source.

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Even more money is coming.

Uber plans raises up to $600 million more in additional fundraising during the first quarter of 2015, according to the person. Uber is targeting partners who will help expand the company. Those potential investors were unclear but Uber announced Dec. 2 that it had partnered with Mexican telecom billionaire Carlos Slim's America Movil to help expand the Uber app's reach in Latin America.

Separately, Goldman Sachs is helping Uber raise additional capital through a convertible bond offering, according to media reports this week.

The names of all the investors in the current round could not be determined. The Wall Street Journal also reported that venture capital firm New Enterprise Associates and sovereign wealth fund Qatar Investment Authority were involved. Mutual fund companies T. Rowe Price and Fidelity Investments have been previously reported as potential investors in the new round.

Spokesmen for Lone Pine, the $27 billion firm led by Steve Mandel, Fidelity and T. Rowe declined to comment. Representatives for Glade Brook, Valiant and Iconiq did not respond to requests.

Mandel worked for Tiger Management under founder Julian Robertson before launching Lone Pine. Valiant is led by Chris Hansen, who previously worked under "Tiger Cub" John Griffin at his Blue Ridge Capital. And Hudson worked with another Tiger alum, Chris Shumway, at his Shumway Capital.

Uber raises $1.2 billion for Asia expansion

Uber investors' optimism on the company appears to brush aside recent scrutiny of the company around potential legal fights with taxi drivers who compete with the private car service as well as comments made by an Uber executive about digging up negative personal information regarding a journalist who had been critical of the company.

The new capital will be used in part to fight competitors like GrabTaxi in Southeast Asia, according to the person and as noted by Uber CEO Travis Kalanick in a blog post describing the fundraising Dec. 4.

"This financing will allow Uber to make substantial investments, particularly in the Asia-Pacific region," Kalanick wrote.

He described the company's rapid growth in the same post.

"2014 has been a year of tremendous growth for Uber. It was just a year ago that Uber was operating in 60 cities and 21 countries–today we are in over 250 cities in 50 countries," he wrote. "We are six times bigger today than 12 months ago–and grew faster this year than last. This progress is remarkable, but it is in the coming years that Uber truly scales and the impact in cities becomes visible."

More cash on the way

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With the current round, Uber is taking advantage of a trend in hedge fund investing whereby firms that traditionally invest in public markets, especially technology stocks, are increasingly tapping into private markets to take early stakes in promising companies. Hedge funds like John Paulson's Paulson & Co., Chase Coleman and Feroz Dewan's Tiger Global, and Glade Brook were among the firms to buy private Alibaba shares and successfully hold them through the company's huge IPO.

Spokesmen for Paulson and Tiger Global did not respond to requests for comment. Paulson managed $22.8 billion as of July 1. Tiger Global managed $14.2 billion as of Dec. 31.

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Other hedge funds have backed Uber competitors. Dan Loeb's Third Point and Philippe Laffont's Coatue Management previously gave money to Lyft, and Tiger Global invested in Malaysia-based GrabTaxi, according to media reports.

Third Point, Coatue and Tiger Global are not involved in the Uber round, according to a people familiar with the situation. Third Point declined comment and a spokesman for Coatue did not respond to a request.