Uber’s biggest rival in China may have just raised the stakes.
The country’s largest taxi app firm and biggest competition to Uber’s ride-sharing service, Didi Kuaidi, is seeking to raise at least $1.5 billion to ward off Uber’s efforts in China, people close to the matter told Bloomberg yesterday (June 15).
The funding could result in a valuation of $12 billion to $15 billion for the newly merged company, potentially making Didi Kuaidi one of China’s most valuable startups.
The news comes just days after Uber solidified how serious it is about investing in the Chinese market by announcing plans to pour $1 billion into its Chinese business.
In a recent letter addressing investors, Uber’s CEO Travis Kalanick confirmed China is a key market for the company’s global expansion — particularly because Uber estimates it already has secured nearly half of the ride-hailing market of the region.
The company has made no secret of its plans to scale beyond the more than 300 cities and 58 countries it currently serves, but speculation over Didi Kuaidi’s plans to raise funds to expand its own foothold may slow down Uber’s plans for growth.
Bloomberg cited research performed by industry Analysys International, which stated Didi Kuaidi currently dominates China’s car-hailing market, accounting for 78 percent of ride bookings. The company is backed by Chinese mobile payment giants Alibaba and Tencent, which own 10 percent and 13 percent, respectively, while Tokyo-based SoftBank also has a stake, they added.
According to Analysys, Uber only accounts for about 11 percent of bookings at this time.
“Before coming together, Kuaidi and Didi both raised significant war chests in the past to finance massive incentives for drivers and price cuts for passengers against each other. Both companies were estimated to have sunk hundreds of millions into this war of attrition which ultimately brought them together,” TechCrunch reported.
“This time around, the merged company could use its new capital — once it arrives — to execute a similar tactic against Uber, but it is almost certainly also looking to next advent in China’s taxi app market: the rise of peer-to-peer (P2P) rides,” they added.
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