SINGAPORE -- With ride-hailing disrupting the traditional transportation business, Singapore's largest taxi operator has started investing in startups to acquire the latest mobility technologies.
ComfortDelGro, which controls about 60% of taxis in the city-state, will soon launch a $100 million corporate venture capital fund that will invest in startups so the company can catch up with the technological changes that are sweeping the industry. The company declined to give details on what technologies it is looking for "due to commercial sensitivities."
The fund will target early stage ventures at a series A and series B fundraising rounds, according to the company.
"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 CEO Yang Ban Seng in a statement.
ComfortDelGro is not an exception. Other traditional taxi operators are also facing challenges as ride-hailing operators crowd the market. On Nov. 9, ComfortDelGro reported net profit for the July-September quarter down 2% from the same period a year ago, making it the sixth consecutive quarter of declining profit.
Ride-hailing apps emerged in Singapore in 2013, when Malaysia-born Grab and America's Uber Technologies entered the market. Backed by the explosion of smartphone usage, Grab and Uber grew fast, affecting traditional taxis. ComfortDelGro's fleet size is down 25% from three years ago.
To address the shifting market, ComfortDelGro last year partnered with Uber, allowing passengers to book its taxis via the Uber app. But a few months later, Grab acquired Uber's Southeast Asian business, ending the partnership.
ComfortDelGro is now hunting for ways to tap into new transport trends. Capitalizing on its 12,000-vehicle taxi fleet, the company will partner with Finnish mobility startup MaaS Global, which plans next year to introduce to Singapore an "all-in-one" mobility app that allows customers to book different forms of transport from one application.
ComfortDelGro is also seeking growth overseas, acquiring a number of transportation businesses outside Singapore at a cost of $450 million Singapore dollars ($326 million) this year alone. Earlier this month, ComfortDelGro announced that it would acquire Australian bus group Buslink for $190.9 million Australian dollars ($138 million), its largest acquisition ever.
"Disruption is taking place all around us, affecting the way we do business," according to ComfortDelGro Chairman Lim Jit Poh. "We cannot sit idly by."
ComfortDelGro was valued at SG$ 4.7 billion based on the closing share price on Nov. 16, the biggest taxi company in Southeast Asia by market capitalization. But increasingly stiff competition from ride-hailing services has caused the share price to drop about 30% since peaking in 2015.
