Didi Kuaidi, China’s version of the ride-hailing app Uber, is drawing in big new investors, including the private equity arm of Los Angeles-based money management firm Capital Group, in its $2 billion fundraising round.
Capital International Private Equity Funds and Chinese insurer Ping An Insurance Group are among the investors participating in Didi Kuaidi Joint Co.'s fundraising, which could raise its value at around $15 billion, the Wall Street Journal reported on Tuesday quoting insider sources.
Didi Kuaidi Joint Co.'s fundraising will be among the largest equity fundraisings for a venture-backed company in a single private placement, the report said. Didi's competitor Uber Technologies collected $2.8 billion in a fundraising round this year, while Chinese e-commerce titan Alibaba Group raised $1.6 billion in 2011.
Best known for its American Funds line of mutual funds, Capital Group focuses on emerging markets and has spawned six funds with total commitments of nearly $7 billion, according to the company website.
China's ride-hailing market is a two-horse race. In June, Uber started formal fundraising specifically for its China operation, UberChina. The U.S. company is also raising money from Chinese fund management firm Hillhouse Capital Group in a convertible-bond deal based on a discount to its future IPO price, according to insider rouses. Beijing-based Hillhouse Capital, which is also an investor in Didi Kuaidi, said that it is investing in Uber's global operations and not its local China operation.
Didi Kuaidi and UberChina, both of which are spending large sums on subsidies to attract drivers and riders, are seeking to raise fresh capital to spend on increasing traffic to their services. Didi Kuaidi's backers include Alibaba Group Holding Ltd. and Tencent Holdings Ltd, while Uber has entered a strategic partnership with Chinese search engine Baidu in 2014 that included an investment in Uber's China operations. Uber's service in China currently uses Baidu's mapping and payments services.
Existing investors in Didi Kuaidi are also participating in the fundraising and are likely to make up a large portion of the deal, according to the Wall Street Journal. The strong demand, which Didi said in an earlier letter to investors was oversubscribed in five days, could push the size of the fundraising round beyond its original target. One person familiar with the situation said that the final size of the fundraising round reach as high as $2.5 billion.
Didi Kuaidi's daily private-car requests have tripled since May to three million, which according to its calculations encompass an 80-percent share of the Chinese market, the company said in the investor letter, while it says that its app is used for three million taxi rides daily, giving nearly all of the taxi-app market. The company currently operates in more than 360 Chinese cities.
Uber CEO Travis Kalanick said in an investor letter published in June that Uber believes it has captured nearly half of the non-taxi ride-hailing market in China, with customers making around one million trips a day.
Both set of figures has not been audited by third parties.
