Carl Icahn takes $100 Million Stake in ride-sharing service Lyft
Carl Icahn takes $100 Million Stake in ride-sharing service Lyft

Providing a big boost to ride-sharing company Lyft Inc.'s expansion plans, activist investor Carl Icahn-led Icahn Enterprises LP has bought a stake in the company by investing $100 million.

In an unusual move, activist investor Carl Icahn's Icahn Enterprises LP has made a $100 million investment in Lyft Inc. This move has added momentum to the ride-sharing company's rapid expansion but left its cash pile far behind rival Uber.

Icahn has joined a long list of backers for the three-year old startup, including Andreessen Horowitz, New York-based technology hedge-fund Coatue Management, Chinese e-commerce giant Alibaba (BABA.N), and hedge fund Third Point Management.

Lyft is known for cars that display a pink moustache logo. It uses a smartphone app to match riders with paid drivers who use their own cars rather than livery vehicles. This service is quite similar to the one that is offered by Uber Technologies Inc.

But, if brought to comparison, Uber, with a global presence, has more diverse services, including limousine-like rides, and aspirations of expanding into logistics, is a much bigger company. It has a $40 billion valuation compared to Lyft's $2.5 billion.

Lyft backers have raised a question that whether Uber's broader mandate has amounted to a valuation that is effectively 16 times greater than Uber.

Uber, in many of its international markets, including China, has been facing tough competition from entrenched local players, while in others, such as Korea, it is facing legal hurdles.

According to the Uber fans, building a global brand ultimately will make the company a stronger player, no matter it is facing setbacks in some markets along the way.

Icahn's investment has been focused on Technology, with bets like Apple APPL.O, Nextflix (NFLX.O) and eBay, but generally, he does not invest in companies as young as Lyft, which was founded in 2012.

In a statement on Friday, Lyft said that one of Icahn's managing directors, Jonathan Christodoro, will join Lyft's board. Lyft is in 65 US locations.