LULA, a South African mobility startup specializing in ride-sharing for office workers, has announced the acquisition of Zeelo ’s South African subsidiary. The acquisition, finalized for an undisclosed sum in a cash-only transaction, marks a significant development in South Africa’s competitive transportation sector.

Zeelo, a US-based company that launched its South African operations in 2019, has decided to exit the market to focus on its core markets in the US, UK, and Ireland. Prior to the acquisition, Zeelo had facilitated over 2 million rides annually in South Africa, amassing a significant user base of over 18,000 riders.

LULA, founded in 2018 by Velani Mboweni and Xabiso Nodada, plans to leverage Zeelo’s extensive network and market presence to further expand its reach across the country. The company currently operates in five South African cities and boasts a track record of 700,000 rides completed for over 380 companies.

Transportation costs remain a major expense for South African workers, with data from Statistics South Africa revealing an average monthly expenditure of R2,180 ($121) for personal car users and R960 ($53) for those relying on taxis. LULA’s acquisition of Zeelo’s South African operations is strategically aimed at addressing this issue and capturing a larger share of the market.

LULA’s business model involves partnering with individual drivers and shuttle fleet operators rather than owning vehicles directly. The company earns a commission ranging from 20% to 40% on each ride provided through its platform. With the integration of Zeelo’s operations, LULA is expected to achieve positive cash flow, enabling the company to pursue a “scale smart” approach to growth.

Velani Mboweni, CEO of LULA, expressed confidence in the acquisition’s potential, stating that it would allow the company to scale strategically and prioritize sustainable growth. Sam Ryan, founder and CEO of Zeelo, while acknowledging the difficult decision to exit the region, expressed optimism about the transition of Zeelo’s customers and suppliers to the LULA platform.

The financial details of the deal remain undisclosed. However, the acquisition is expected to significantly bolster LULA’s market position and contribute to its ongoing efforts to provide affordable and accessible transportation solutions for South African workers.