DealBook: Uber Receives $3.5 Billion from Saudi Arabia | Payday Loan Industry Could Soon Be Gutted | Sumner Redston

BY AMIE TSANG UBER RECEIVES $3.5 BILLION FROM SAUDI ARABIA Uber has turned to the Middle East in its quest to build a global empire. It raised $3.5 billion from Saudi Arabia's Public Investment Fund in one of the largest ever investments into a privately held start-up, Mike Isaac and Michael J. de la Merced report in The New York Times. This round of fund-raising continued to value the company at $62.5 billion.  Uber said the investment aligned the company with Saudi Arabia's plans to transform its economy and reduce its dependence on oil. It came together after David Plouffe, an Uber board member, traveled to the Middle East in March and was invited to the Saudi fund for a briefing.  Uber, Silicon Valley's most valuable private business, has redefined private fund-raising, drawing hundreds of millions in new cash every six months or so. It has been spending furiously to expand and defend its territory, particularly in China, where it is in a subsidy war with Didi Chuxing, the dominant ride-hailing start-up.  Uber said it planned to invest $250 million in The Middle East where it has rolled out its service in 15 cities across nine countries. It also said its service may be a boon for Saudi Arabia, where women are not allowed to drive because of religious edicts. "Of course we think women should be allowed to drive," said Jill Hazelbaker, an Uber spokeswoman. "In the absence of that, we have been able to provide extraordinary mobility that didn't exist before - and we're incredibly proud of that." The company said about 80 percent of its riders were women.  Princess Reema bint Bandar al-Saud sits on Uber's public policy advisory board and has worked with it to usher the service into the country. Saudi Arabia was not known for venture capital investing, but some members of the royal family have been involved in deals. Prince Alwaleed bin Talal has invested in Lyft, a competitor of Uber.  Investing in an American company like Uber, however, could run counter to Saudi Arabia's threat to sell off investments in the United States, which was issued during discussion about a bill in Congress that would allow the kingdom to be held responsible in American courts for any role in the Sept. 11, 2001, attacks.  Saudi Arabia had just two advisers on the deal: JPMorgan Chase on the financial side and Skadden, Arps, Slate, Meagher & Flom on the legal side. The deal is unlikely to yield a huge payday for these companies, but it lends them bragging rights and could put them in line for advisory positions down the line, Michael J. de la Merced reports in DealBook. JPMorgan is already helping advise the kingdom in its initial public offering of Saudi Aramco, the state-owned oil company. PAYDAY LOAN INDUSTRY COULD SOON BE GUTTED New rules that federal regulators plan to announce on Thursdaycould severely restrict the payday loan industry, which has been vilified for the exorbitant interest rates it charges on short-term loans, Stacy Cowley reports in DealBook. People who borrow money against their paychecks are generally supposed to pay it back within two weeks, with substantial fees piled on, but as most borrowers roll loans over into new ones, they become steadily less less likely to emerge from the debt. Mainstream banks are generally barred from this kind of lending and more than a dozen states have their own rules prohibiting payday loans.  The new guidelines from the Consumer Financial Protection Bureau willrequire lenders in many cases to verify their customers' income and confirm that they can afford to repay the money they borrow. The number of times that people could roll over their loans into newer - and more expensive - ones would be curtailed. The new rules do not need congressional approval and could take effect as soon as next year. "The very economics of the payday lending business model depend on a substantial percentage of borrowers being unable to repay the loan and borrowing again and again at high interest rates," said Richard Cordray, the director of the bureau. "It is much like getting into a taxi just to ride across town and finding yourself stuck in a ruinously expensive cross-country journey." Dennis Shaul, the chief executive of the Community Financial Services Association of America, a trade group for payday lenders, responded by saying that vulnerable borrowers would be cut off from a financial lifeline. "Thousands of lenders, especially small businesses, will be forced to shutter their doors, lay off employees, and leave communities that already have too few options for financial services," he said.  The Consumer Financial Protection Bureau estimated that loan volume could fall by at least 55 percent. An economic study paid for by the trade association also estimated that the $37,000 annual profit generated by the average storefront lender would instead become a $28,000 loss.  Some consumer advocates say the rules still do not go far enough. "This misses the mark," said Nick Bourke, a research director at the Pew Charitable Trusts, which has conducted extensive research on small-dollar lending. "The C.F.P.B. is proposing an underwriting process, which is helpful, but clearer product safety standards are needed." ON THE AGENDA Lawrence H. Summers will give the Daniel E. Holland III keynote address at the Boston College Carroll School of Management finance conference at 8:45 a.m. Robert S. Kaplan, will take part in the Dorothy Margaret Rose Knight Economic Keynote Discussion in Boston at 1 p.m. The European Central Bank's governing council will hold a news conference at 9:30 a.m., after its latest monetary policy meeting. SUMNER REDSTONE'S GRANDDAUGHTER SIDES WITH VIACOM DIRECTORS The battle that is splitting Sumner M. Redstone's $40 billion media empire has created yet another divide, Emily Steel reports in The New York Times. His granddaughter Keryn Redstone has sided with the Viacom directors who are challenging his competence and asserting that he was manipulated by his daughter, Shari Redstone.  Keryn Redstone said in statement that she was planning legal action to join with Viacom directors in a "common cause to liberate my grandfather from Shari's clutches and protect my fellow trust beneficiaries and myself from her machinations."  Keryn Redstone, 34, said that her grandfather had been incompetent since October and that she had been prevented from seeing him since Valentine's Day, when he "sat there lifeless and flanked by nurses and caretakers."  She also asserted that Shari Redstone and her family had "managed to totally isolate and effectively kidnap, brainwash and take advantage of my grandfather due to his debilitated state of mind and frail health." She added that Shari Redstone and her three children had "succeeded in reversing decades of my grandfather's careful estate planning and are poised to seize control of Viacom and CBS."  Feuds are not uncommon in the Redstone family. Keryn Redstone is the daughter of Brent Redstone, Sumner's estranged son. Brent Redstone sued his father in 2006 asserting that he had favored his sister and frozen him out of the family business. They settled the year after, when Brent Redstone's share of the business was bought out.  Keryn Redstone unsuccessfully filed a petition in April this year to join Manuela Herzer, a former companion and onetime romantic partner of Mr. Redstone, in Ms. Herzer's suit challenging the media mogul's mental competency.  The specific legal action that Keryn Redstone plans to take is unclear. "I do not intend to let Shari get away with this outrage," she said in her statement. Contact amie.tsang@nytimes.com MERGERS & ACQUISITIONS » Salesforce.com to Acquire Demandware for $2.8 Billion The purchase price is an aggressive bet on growth. If Demandware doesn't deliver over several years, Salesforce will have wasted a chunk of its cash, Robert Cyran writes in Breakingviews. NYT » Hopes of a Quick Acquisition of Tribune Look Slim for GannettAs of Wednesday evening, the prospects for a big "withhold" vote were looking slim. POLITICO Alibaba Details Plans to Repurchase Shares From SoftBank The total value of the selloff, reflecting additional interest from investors, is $8.9 billion. THE WALL STREET JOURNAL Premier League Soccer Clubs Become Targets as Profits RiseTeams were always attractive to overseas investors, but usually more for emotional reasons or as trophy assets, analysts say. 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