The deal comes a week after Uber CEO Travis Kalanick said his company is losing over US$1 billion per year to compete in China
China’s taxi-hailing company Didi Kuaidi is expected to raise US$1 billion in a new fundraising round which is reportedly oversubscribed, according to a report from Bloomberg.
Citing a person close to the negotiations, Bloomberg reports Didi Kuaidi is negotiating terms with the investors and Didi Kuaidi declined comment as the deal has not been finalised.
Once complete, the deal would value Uber’s chief rival in China at US$20 billion.
The round will add more ammunition for Didi Kuiadi in its ongoing battle with UberChina to dominate the ride-hailing industry in the world’s most populous nation.
Uber said last week it is losing US$1 billion a year to compete in China. In January UberChina raised over US$1 billion and is valued at US$7 billion. Globally, Uber is valued at a whopping US$62.5 billion.
The current round is not even the largest round of the last year for Didi Kuaidi. In July it raised US$2 billion before supplementing it with an additional US$1 billion in September.
The war for China between Didi Kuaidi and Uber has a few interesting storylines — with the first being that in November Analysys Asia released data claiming an 83.2 per cent market share for private car hailing (essentially dominating Uber at its own game).
As of January, Didi Kuaidi had expanded into 400 cities while in comparison UberChina has set a goal for 100 cities by the end of 2016.
The fact that China’s major internet companies have jumped into the fray as investors for both companies adds intrigue. Didi Kuaidi is backed by Tencent and Alibaba while UberChina is supported by Baidu.
Finally, of course, is the global ride agreement between Didi Kuaidi, Ola, Lyft and Grab to essentially work as a team to impair Uber’s ability to take hold in the region. As part of that agreement, it was reported last week Lyft users will be able to hail cars in China in the upcoming months.
An interesting note is Alipay works on both services.
Moving forward, it does not appear like Uber will go away. CEO Travis Kalanick made it clear the importance of China to his vision last week when he dropped the bomb of losing US$1 billion in China (which, it turns out also is a major reason Uber is not profitable).
“We have a fierce competitor that’s unprofitable in every city they exist in, but they’re buying up market share. I wish the world wasn’t that way. I prefer building rather than fundraising. But if I don’t participate in the fundraising bonanza, I’ll get squeezed out by others buying market share,” he said.
The war chests seemed to be stocked on all sides, now it is time to sit back and watch how both companies weld all this money.
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