Uber Technologies Inc. finally set its initial public offering range on Friday in an announcement that came with a surprise: PayPal Inc. is investing $500 million into the company before the IPO.

The announcement of Uber’s IPO pricing came in as expected, with the ride-hailing giant looking to sell 180 million shares at $44 to $50 each for a valuation of $80.5 billion to $90.5 billion.

The valuation range is notable because it’s well below the $120 billion mentioned for Uber last year and down from the company’s own initial valuation guidance of $90 billion to $100 billion when it first filed its paperwork with the U.S Securities and Exchange Commission April 11.

The lower figure is strongly believed to reflect the performance of Uber main competitor Lyft Inc. since it went public March 28. Although it initially popped, shares in Lyft dropped below the initial price of $72 a share on its second day of trading and haven’t stopped falling since, down 20.5% from its IPO price as of the close of trading Friday.

Pricing aside, the last-minute deal with PayPal came out of left field, and neither company provided much in the way of details. PayPal made a $500 million investment in Uber at $47 per share, the midpoint of Uber’s IPO range. The two companies have had a relationship since 2013, with the new deal seemingly locking PayPal in a long-term Uber partner.

PayPal Chief Executive Officer Dan Shulman wrote on LinkedIn that the pair plan to look at future commercial payment collaboration, including the development of Uber’s digital wallet. “This is another significant milestone on our journey to be a platform partner of choice, helping to enable global commerce by connecting the world’s leading marketplaces and payment networks,” he added.

Although it’s natural that PayPal would want to remain a payment platform of choice for Uber, particularly given that Uber booked $11.27 billion in revenue in 2018, the collaboration on the Uber Wallet may be somewhat new.

Digital wallet services offer massive growth opportunities for players in the space and Uber has been talking up its wallet for years. In the U.K., Uber teamed with Barclays plc in 2017 for a digital payments service, while the company offered a cash wallet for the unbanked in Brazil in September.

App payment services have become ubiquitous in China and are rapidly spreading across the world. Incumbents such as Apple Pay and Google Pay may have a head start in the U.S., but they are nowhere nearly as strong as WeChat and Alipay in China.

Should Uber, in conjunction with PayPal be able to tap into a growing global digital wallet market, there’s a huge potential upside for both.

Uber is expected to start pitching investors as part of its IPO roadshow on Monday.

Image: Uber