Didi Chuxing, the Chinese ride-hailing giant who managed to gulp its fiercest rival Uber’s business in the country, is now also looking to match in terms of valuation. The company is nearing the closure of a fresh fundraising round, where it could raise up to $6 billion at a significant valuation which exceeds $50 billion, reports Bloomberg. This investment would direct Didi into becoming Asia’s most valued startup.
Citing sources privy to the developments, the publication suggests that the fundraising round may close as soon as — the next week. It follows in line with previous such reports, which started surfacing towards the end of March. This round, if completed, will witness a massive uptick in the Chinese giant’s valuation. It is expected to peak around $50 billion, which marks close to a 50 percent increase in the valuation. It was previously valued at around $34 billion when it merged Uber’s China unit into its own business.
Yes, for those unaware, this acquisition deal was one of the most prominent ones that made the headlines earlier last year. Instead of constantly pouring money into its Chinese operation in the name of competition, Uber decided it was time for them to bow down to the homegrown rival. This transaction drove Uber as a company out of China, but their brand still continues to operate under Didi.
In exchange for Uber China assets, the ride-hailing giant will receive 5.89 percent of the combined company. It also saw Cheng Wei, founder and chairman of Didi Chuxing and Travis Kalanick, founder of Uber join Uber’s and Didi’s board respectively. The company previously raised funds, which has now become a constant affair, from the likes of Foxconn, China Life, and even Apple.
Now, this fundraising round could help Didi Chuxing leapfrog from its current position in the valuation chart to the second spot — in the world. The $50 billion valuation is now only giving it leverage enough to attain the top spot in China or the whole of Asia but this will yet again pit the ride-hailing against its fiercest rival — now a much larger playground, though. This funding round will see it cross Chinese hardware upstart Xiaomi Corp (approx $45 billion) and Alibaba’s affiliate Ant Financial (approx $50 billion), who occupy the second and third spot respectively.
As for the investment, sources suggest that Didi will attract its existing backers Bank of Communications, China Merchants Bank, and SoftBank for this round. There is also the possibility that Cupertino might pitch in again — Apple CEO Tim Cook recently took a trip to China if you remember. U.S-based Silver Lake Kraftwerk could be only one new investor for the ride-hailing giant. The company has already raised around $7.4 billion in total and counts the likes of Alibaba, Temasek, and Tencent among others as its investors.
Now, the rumors of another fundraising round beg the question — What does Didi intend to do with such flooding coffers? It already acquired its arch-nemesis last year and doesn’t exactly need to worry about other sprawling upstarts. So, this means there could only be two prominent avenues for investing these funds — autonomous technology and expansion.
The ride-hailing giant may have plans to extend its reach beyond China in the coming years and several proofs of the same popped up a couple months ago. It is developing an international English version of its app, meaning it is ready to bust Uber’s success bubble yet again.
It has also set up an R&D center called Didi Labs in Silicon Valley last month, to focus on the development of its self-driving software technologies. The company has been lagging behind on this front, while its rivals have been accelerating their progress. Waymo seems to be currently taking the lead as Uber is embroiled in a legal battle with the former.