Uber Technologies Inc. has hired a chief financial officer, the ride-services company said on Tuesday, filling a long-standing vacancy and clearing the way for a much-anticipated initial public offering next year.
Uber said it has hired Nelson Chai, a financial services veteran with deep connections to the banks and deal-makers Uber must impress ahead of what is expected to be a large, complicated IPO. Uber lost more than $1 billion per quarter in three of the last six quarters. Still, it hopes its growth potential will attract investors.
Uber must meet its self-imposed deadline of an IPO next year or a shareholder provision that would lift transfer restrictions on shares could create a chaotic market of buying and selling Uber stock.
The CFO position has been empty since 2015, when Brent Callinicos departed. Previous Uber Chief Executive Officer Travis Kalanick had shown little interest in hiring a replacement, but the search stepped up last year under new CEO Dara Khosrowshahi.
Uber’s most senior finance executive, Prabir Adarkar, left last month to become CFO at meal-delivery service DoorDash, further depleting the department.
Uber’s lack of a CFO, and the protracted search for one, had worried investors. Operating without such a senior manager is rare for a company the size of Uber, whose net revenue, after payment for drivers, promotions and refunds, was $2.8 billion in the second quarter this year. A CFO is also vital for conducting an initial public offering.
“I know people at the major investment banks,” Chai, 53, said in an interview. “After the announcement (from Uber) goes out, I expect to become a lot more popular with people from my past.”
Chai has had stints at Merrill Lynch, where he worked as CFO through the financial crisis, and Bank of America after it bought Merrill Lynch in 2008. He was also president of commercial lending bank CIT Group.
Previously, he worked as CFO at Archipelago Holdings and helped take that electronic stock exchange public in 2004. It was later bought by the New York Stock Exchange, where Chai worked as CFO until 2007.
Most recently, he was president and CEO of insurance provider The Warranty Group, part of Assurant, and was placed there by private equity firm TPG to improve the company’s performance. His relationship with TPG, an Uber investor and board member, and especially John Thain, another Uber board member who ran CIT Group, Merrill Lynch and the New York Stock Exchange, led him to Uber.
Chai said he had breakfast with Khosrowshahi in June, his introduction to the job and the man he would work for.
“He will be a great partner for me and the entire management team as we move toward becoming a public company,” Khosrowshahi said.
Uber chose Chai after making an offer to VMware CFO Zane Rowe this past spring. Rowe turned it down under pressure from his board, according to people familiar with the matter.
Monumental Task
Chai acknowledged Uber must work to convince public market investors it can keep growing and that it has a path to profitability after losing more than $4 billion last year. Revenue for the second quarter was up 8 percent over the first quarter and more than 60 percent from last year.
Potential investors will challenge him to explain the sphere of business at Uber, which has oscillated between investing and divesting in products, strategies and geographies.
This year Uber sold its Russia and Southeast Asia businesses while pledging to invest heavily in India. It scrapped its autonomous trucking effort while doubling down on its freight-hauling business. It bought an electric bike company and is eyeing a scooter service but retrenched from its self-driving car ambitions.
“The bigger part is going to be talking through some of the strategy choices the company has made to invest in and shareholder return,” Chai said.
Uber had a number of executive vacancies to fill since Kalanick departed, and not all have gone smoothly. Chief Operating Officer Barney Harford, picked by Khosrowshahi, has been accused of making racially insensitive comments, prompting an internal probe.
Chai is based in New York City and said he is currently looking for an apartment in San Francisco. He starts the job next month.