Didi Is Looking For USD 2 Billion Funding
COVID-19 and China
A driver uses didi app. Image credit: Baidu picture

Chinese ride-hailing giant Didi Chuxing Technology Co. is seeking a new round of funding worth USD 2 billion from investors according to people who know this matter, the WSJ said.

The company is said to sell additional shares at the same price when Booking Holdings Inc. threw in the cash in July 2018. The new round of funding tends to pull up market capitalization of the company from USD 56 billion in 2017 to estimated USD 62 billion, people familiar with this matter said, with paper valuation increasing by 10.7%.

Despite being the biggest ride-hailing company in China that facilitates 30 million rides a day, Didi is still trapped in a huge sum of losses. Chen Xi (陈熙), executive of Didi, said in April this year that the average loss rate for every single ride in China reached around 2% in the fourth quarter of 2018, which means Didi paid USD 1.02 for every dollar generated from fares.

So far, losses are prevailing in the world ride-hailing market. Uber and Lyft implied in their respective securities filings that the former reported an operating loss of USD 3.3 billion in 2018 while the latter reported a loss of USD 911 million. An independent investor who focuses on internet industry said Didi's 2% loss rate could signal they are approaching the breakeven. But he further stated that as Didi did not reveal any detailed financial information, it was infeasible to say when Didi would realize the breakeven target.

Didi was valued at USD 51.6 billion as of December according to Uber's securities filings. Uber holds 15.4% of Didi as it sold its operations to Didi after fierce price combat in 2016 and gained a minority stake. In addition to Uber, some other shareholders of Didi include most valuable companies such as SoftBank Group Corp., Apple Inc., Alibaba Group Holdings Ltd., and Tencent Holdings Ltd. It isn't clear how those shareholders will respond to new funding round of Didi as no one immediately comments.

The privately-held company would become the third-largest private tech company in the world after the injection of new funding, ranking after Ant Financial (蚂蚁金服) and Bytedance (字节跳动).

Besides, Didi published safety solutions for its Hitch program on July 18, which has been suspended since last August, see more details here. Recent movements suggest that Didi's IPO plan, which was pulled back last year due to the safety issue, is put on the table again.

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