oBike investor and local startup Anywheel make play for Mobike

Singapore

BIKE-SHARING firm Mobike could have its global operations outside China snapped up by two Costa Rican brothers, The Business Times has learnt. They lead an investment firm that last September became the majority shareholder in troubled company oBike.

Partnering them is local bike-sharing startup Anywheel, which has clinched an informal agreement to manage Mobike's Singapore operations if the brothers' offer to Mobike's owner is successful.

OSS Inversiones - the investment firm led by brothers Oscar Moises Chaves and Samuel Chaves - has proposed to acquire all of the shareholding interest in Singapore Mobike Pte Ltd and Mobike BV, the holding company of Mobike's international subsidiaries, according to a document seen by BT.

Earlier this month, reports surfaced that China-based Mobike was laying off staff in the Asia-Pacific region and had intentions to pull out of the international market to focus domestically. Singapore's Land Transport Authority (LTA) confirmed on March 12 that the company has applied to surrender its bike-sharing licence in Singapore, which allows it to operate a maximum fleet size of 25,000 bikes.

Mobike was backed by Tencent Holdings and acquired last year by Chinese food delivery giant Meituan Dianping for US$2.7 billion. The deal reportedly valued the startup at US$3.4 billion.

OSS submitted its offer for Mobike to Meituan last Monday, according to Mr Samuel Chaves. But the brothers said they sensed hesitation from Meituan in signing the term sheets.

They also learnt from an associate that US-based urban mobility firm Lime might be going after Mobike's Singapore and Japan operations as well. In Singapore, Lime offers electric scooter-sharing services.

Up till recently, Anywheel was also in talks with Meituan to acquire Mobike's Singapore operations. So the brothers approached Anywheel to form a strategic alliance - OSS will acquire Mobike's global operations excluding China, and Anywheel will manage the Singapore operations as a partner, with a profit-sharing model.

Teaming up was natural for them since their interests are aligned, the two parties told BT.

Both would like to put more weight behind the acquisition offer, and both would rather not have Lime as a competitor.

Lime told BT on April 2 that it does not intend to take over any of Mobike's operations in Singapore or any other markets.

"We are focused on our e-scooter operations here in Singapore and remain committed to providing quality products and educating users on how to use them safely," said Ashwin Purushottam, general manager of Lime Singapore.

Anywheel currently holds a sandbox licence that allows it to operate up to 1,000 bikes. The firm applied to LTA in February for a full licence to operate a five-figure fleet of bikes, its founder and CEO Htay Aung said. LTA has not yet released the result of the application.

If Mobike exits the Singapore market, it would leave Anywheel, SG Bike and Qiqi Zhixiang as the remaining bike-sharing operators. A spokesman for Meituan said earlier this month that it will work with LTA to explore all options for Mobike, including possibly transferring the operations or licence to existing licensees.

When contacted, SG Bike's marketing director Benjamin Oh said the firm was unable to comment. SG Bike has a full licence to operate up to 3,000 bikes.

Though Qiqi was awarded a sandbox licence in September for up to 500 bikes, it has yet to deploy any. Its app is also not available for download.

While bike-sharing has become an oft-quoted case of startups burning through venture money only to run into all kinds of issues, Anywheel believes it can succeed where its counterparts have failed.

"We are trying our best to grow our fleet size organically and responsibly in such a way that our company can sustain it, making sure we are here for the long run," said Mr Htay Aung.

"At the earlier stage of planning our business here in Singapore, we put considerable effort into exploring possible regulations that the local authorities might impose for this sharing industry. Taking all this into account, we decided to start our operation here in Singapore with a conservative approach and careful execution."

OSS Inversiones is an investment firm that buys over troubled companies, fixes them up, then sells them off for a profit. Moises and Samuel Chaves used a portion of the earnings from the sale of the family business to set up OSS. The family owned a textile manufacturing firm in Costa Rica called Grupo ARNS, which was sold for "hundreds of millions" in US dollars.

The brothers led OSS' acquisition of a 66.9 per cent stake in oBike's global operations last year for an undisclosed sum, and vowed to clear the firm's spiralling debt. They are represented by law firm Rajah & Tann.

The pair are now eyeing Mobike's operations for the same reason it was after oBike - to gain the data and tech platform to fulfil their global ambitions for micro-mobility.

0MN1 Sharing is the company set up by the brothers to materialise this vision. Elder brother Moises is head of investment at OSS and director at Omni. Samuel, the younger, is director at OSS and CEO at Omni.

Singapore-headquartered Omni applied for a sandbox licence last month to rent out 500 e-scooters. Omni's scooter is equipped with a seat and can be taken onto trains.

Moises, 29, reckons that with a seated scooter, users of all ages can ride more safely and travel longer distances.

The ultimate goal is to offer a suite of urban micro-mobility solutions for consumers. The brothers are also bent on proving to the world that bike-sharing is profitable. The industry has been plagued by improper management, insufficient attention to cash flow and a flippant disregard for regulations, they told BT.

"The thing is, you cannot judge the industry for what the three main players did," said Samuel, 24. He said the company will do things differently by working very closely with regulators, investing in research and development, looking to advertising as a revenue stream, and focusing on safety and longer ride trips.

His brother added: "Micro-mobility has already been proven to be a necessity on the streets even when people think it is not profitable. People need the first and last mile solution."

The firm intends to charge users using a subscription model. It will also deploy staff to recalibrate the distribution of the bikes - for instance, moving the bikes back to designated parking spots, or shifting them to hot spots that see high volume of users during a certain time of the day.

Why come all the way to Singapore to start the business? Because if they can work within Singapore's legislations, they can work with any country in the world, they said.

In December 2018, Mobike had a total of 24,266 deployed bikes in Singapore and 37,717 functioning bikes stored for later deployment, according to data seen by BT. Globally, it had 92,320 deployed bikes and 80,744 bikes in storage.

Moises said if OSS succeeds in acquiring Mobike, they will use the bikes while doing market research, sharpening their strategy and improving the fleets.

"By 'improving', I mean give maintenance to existing bikes, decrease or increase fleet numbers according to market research on each city, and create ecosystems between the actual mechanical bikes and any other micro-mobility vehicle such as power-assisted bicycles (PABs) and personal mobility devices (PMDs)," he said.

Mobike Singapore recorded 46,320 monthly active riders and 482,054 trips on its app in December.

As Omni works towards its global mission, it is adding key hires to its team. Among them are Sharon Meng, Mobike's former Asia-Pacific head of growth, who will now lead business development at Omni; and Lawrence Paul De Cruz, Ofo's former senior operations manager for Singapore, who is chief operating officer at Omni.

The company currently has 12 staff in Singapore and will expand the team up to 30 once the e-scooter licence is approved. It has 40 people in its IT office in Shanghai.

Until early March, the Chaves brothers also had plans to acquire the global operations of Ofo, which has been hit with cashflow issues; had its full licence in Singapore suspended; and allegedly made unauthorised charges to users. But those plans for Ofo have since been called off.

"It's a grenade we don't want to touch," Samuel said.