Didi Chuxing suffered losses of almost USD 1.61 billion (RMB 11 billion) last year, but that did not keep Soft bank from not investing in the company once again.
SoftBank’s chairman and CEO Masayoshi Son revealed in an interview with CNBC that the company is injecting an additional USD1.6 billion into Didi Chuxing, its third investment following earlier rounds.
Son added “So, there, the margin, pay grade, is 20% or more. So, it’s actually a very reasonable, very profitable business. It’s just that they are growing so rapidly"
Although Didi is yet to make a profit, Son considers investment in China’s largest ride-hailing company “reasonable” because it grows so fast.
Softbank previously announced that it will be transferring its ride-hailing stakes which include stakes in Uber, India’s Ola, and Southeast Asia’s Grab to Vision fund, though it is unclear if this investment will be made by SoftBank or vision fund.
This will be the third investment of Softbank in China's ride-hailing giant. It first invested in Didi Chuxing’s USD 4.5 billion funding round in 2016 and then made an additional investment in 2017 with USD 4 billion round.
In February, Chinese tech news site 36kr reported that Didi Chuxing had incurred losses of up to USD 1.61 billion in the fiscal year 2018 due to heavy spending on training and recruitment of skilled drivers. According to the report, the ride-hailing giant spent a total of USD 1.67 billion on incentives to attract qualified drivers with at least three years of driving experience and no criminal record.
Son admits that Didi Chuxing and other players in the ride-hailing industry are not making money yet but stressed that these firms are growing quickly.