Didi Chuxing, the Chinese ride-hailing giant and a rival to Uber, has secured fresh financing of more than $4 billion. According to Bloomberg, citing sources aware of the deal, the latest funding pushes Didi’s valuation to around $56 billion, while its cash reserve would increase to $12 billion.
Rising potential for ride-hailing companies
Investors participating in the latest funding round include names like SoftBank of Japan and Mubadala, an Abu Dhabi state fund, says The New York Times, citing a person familiar with the deal. The Chinese company was last valued at about $50 billion in April, after it secured $5.5 billion financing from investors which also included SoftBank.
Didi is among the heaviest funded private companies in China. Its backers include the country’s sovereign wealth fund, Alibaba Group, WeChat-operator Tencent and Apple. Lately, ride-hailing companies are seeing a regular and big chunk of capital inflow from the wealthy investors who believe in the vision of these companies to transform the way people commute.
SoftBank’s leader, Masayoshi Son, has taken a keen interest in the companies that sit on large piles of data, which could fuel the technology-led transformation across various platforms from food to finance. SoftBank also holds a stake in Uber’s rival in the U.S., Lyft, Ola in India and Grab in Southeast Asia, notes The New York Times.
How Didi Chuxing plans to use the fund
Didi Chuxing emerged from the merger between local rivals – Didi Dache and Kuaidi Dache – in 2015. The company offers smartphone-based car services, similar to that of Uber. The ride-hailing company that offers services ranging from carpooling taxis to premium cars with drivers, previously stated that it is offering data to cities, which in turn are using it to resolve traffic congestion.
The Chinese company would utilize the fund in expanding in new markets and technologies. The five-year-old Chinese company is looking to explore international options, as well as go full throttle on developing self-driving and electric vehicle systems.
Didi Chuxing has already started spreading its wings beyond China, backing the Estonian player Taxify OU and plans of expanding into Taiwan through a franchising model. Further, in August, the company invested in Careem, an Uber rival with a strong foothold in various cities across the Middle East, Africa and Asia. Didi also backed Taxify, an e-taxi company running in Europe and Africa.
Didi has also made big investments in Artificial Intelligence to improve the service. Earlier this year, the company opened an AI research lab in the U.S., and made a few significant hires in the AI and security space in 2016, notes TechCrunch. The Chinese company claims to operate the world’s biggest fleet of electric cars. Of the two million electric vehicles in the country, more than 260,000 are on its platform, the company said.
Uber, on the other hand, is struggling to stay upright in the wake of peaking regulatory scrutiny in Europe and increasing losses. Didi Chuxing, the topmost ride-hailing company in China, acquired Uber’s business in China last year, after years of fierce competition. Both Didi and Uber are not listed on any stock exchanges around the world.