SINGAPORE: ComfortDelGro Corp said on Friday (Nov 9) that it is setting up a US$100 million corporate venture capital fund to invest in technology start-ups that complement its land transport business.
The move - which comes amid intense competition from third-party apps such as Grab for both passengers and cab drivers – is aimed at helping the company address the impact of disruptive challenges to its core land transport business, it said.
The company is setting up the fund to "focus on incubation and investments in mobility technologies and solutions … whilst providing it with new strategic capabilities", ComfortDelGro said in a press release on Friday.
Called ComfortDelGro Capital Partners, the global fund will focus on "next-generation mobility companies raising their seed stage Series A or Series B funding rounds", the company said.
"While we continue to pursue bolt-on acquisitions of our core land transport and related businesses, there is a need for us to develop and acquire new mobility technologies and solutions which will not only build on our strong foundations, but also enable us to branch out into new annexes," said ComfortDelGro Group CEO Yang Ban Seng.
"The strategic rationale for setting up the fund is to help increase our leverage in partnerships with technology start-up companies, by giving us a pathway to eventually acquire or monetise them," he said.
ComfortDelGro on Friday also reported that its third-quarter net profit slid 2 per cent to S$78.5 million year-on-year, even as the taxi business showed a slight improvement over the last quarter.
Revenue for the three months ended September rose 8.5 per cent to S$968 million from the same period last year.
"Organically, our Singapore and overseas public transport business continued to do well with higher mileages operated. The Singapore taxi business has shown slight improvement compared to the last quarter," said Mr Yang.
At a group level, revenue from the Public Transport Services business increased by 15.2 per cent to S$692.9 million.
This was mainly due to higher fees earned with higher mileages operated due to the commencement of the Seletar Bus Package in March 2018, higher ridership from rail services with the commencement of Downtown Line Stage 3 and contributions from new acquisitions in Australia and the United Kingdom.
Going forward, it expects this segment to continue growing, citing the fare adjustment of 4.3 per cent approved by the Public Transport Council that will take effect from Dec 29.
Revenue for the taxi business decreased by 8.4 per cent to S$182 million due to a reduction in its operating fleet. In Singapore, the group will be taking delivery of up to 700 new hybrid taxis by the end of this year.