Investors show interest in car-hailing services
Chinese car-hailing firm Didi Kuaidi has raised $2 billion and is enlisting new investors including Capital International Private Equity Fund and Chinese insurer Ping An Insurance (Group) Company, Didi Kuaidi announced Wednesday.
The ongoing fundraising will last until August 8 with more firms expected to invest in the company, according to a document sent by Didi Kuaidi to the Global Times Wednesday.
"The number of investors is actually more than what we've announced to the public, as many of them hope to keep a low profile," said Ye Yun, a PR staff from Didi Kuaidi.
Upon the completion of the fundraising, Didi Kuaidi will hold over $3.5 billion in cash reserves, which will make it the largest Internet company in terms of cash volume, the document showed.
"Investors are betting on the company's future development," Cheng Wei, CEO of Didi Kuaidi, was quoted as saying in the document. The new investment will be used for expanding the company's network in the country and improving its data processing capability, according to the document.
Didi Dache and Kuaidi Dache, backed by Chinese Internet giants Tencent Holdings and e-commerce giant Alibaba Group Holding respectively, announced their merger worth $6 billion in February.
Didi Kuaidi is now receiving 3 million daily taxi app orders. Meanwhile, it is diversifying its services such as providing premium and express car services. The premium-car operation is now covering more than 80 cities with about 3 million app orders every day, according to the document.
"The company raised the funds to prepare for a new battle," Zhang Xu, analyst from Beijing-based market research firm Analysys International, told the Global Times Wednesday.
Zhang noted that though Didi Kuaidi now has a leading position in the taxi-hailing industry, the company and its major rival - American car-hailing service provider Uber - are likely to engage in cut-throat competition over premium-car and ride-sharing services.
Uber recently announced to set up an independent management system and separate office for the Chinese market, according to media reports. Compared to its Chinese rival, the U.S.-based car-hailing service provider is more focused on the premium-car service, media reports said. Both companies have been spending huge sums on promotions to win over as many users as possible.
Uber has raised over $6.8 billion globally and has confidence in its future development as well as fundraising capability, a PR representative from the company who refused to be named told the Global Times Wednesday.
While pushing forward its core business, Didi Kuaidi is seeking for innovative solutions in public transportation, which is likely to attract private equity firms, a Hong Kong-based fund manager who requested anonymity told the Global Times on Wednesday.
"However, the large amount of funds raised by the company doesn't necessarily mean it will be valued at a high price if it goes public in the future," he said, noting that private capital managers are usually more enthusiastic about new ideas, such as Didi Kuaidi's intent to add bus-hailing service.
"Investors' interest in car-hailing app also reflects their expectations for the country's booming online-to-offline industry," he noted.
In the next three years, Didi Kuaidi is aiming to serve 30 million users globally every day, according to the company's document.
Besides building the car-hailing platform, Didi Kuaidi is also looking at establishing a comprehensive transportation chain including logistics and car insurance, the document revealed.
Intensifying rivalry
Dec 2014, Uber said it was logging 1 million daily rides worldwide.
Dec 17, 2014 Search giant Baidu made a strategic investment in Uber. The value of the deal was not disclosed.
May 31, 2015 The Shanghai municipal government joined hands with Didi Kuaidi to launch a taxi-hailing online platform.
Jun 11, 2015 Uber CEO Travis Kalanick said in an internal letter to investors that Uber was logging in 1 million daily rides in China. Kalanick also revealed the company intends to raise $1 billion specifically for its China operations.
Jun 29, 2015 Uber CEO Travis Kalanick said Uber will set up an independent company for its China operations.
