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China’s Uber Rival Didi Adds Insurer to List of Powerful Investors
After backing Uber, China Life Insurance sinks 600 million dollars into rival Didi Chuxing
By RICK CAREW, DOUGLAS MACMILLAN and JURO OSAWA
June 13, 2016 1:45 a.m. ET
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China’s top life insurer, which has invested in Uber Technologies Inc., is now pouring 600 million dollars into its Chinese ride-hailing rival.
Didi Chuxing Technology Co., China’s largest ride-sharing company, announced the strategic investment from China Life Insurance Co. on Monday, after The Wall Street Journal reported earlier on the deal.
China Life, the country’s largest state-owned insurer, is the latest addition to the list of Didi’s powerful investors, which includes China’s biggest internet giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd. Last month, Apple Inc. joined as an investor, pledging 1 billion dollars to Didi.
Didi has been raising money from investors for a massive financing round that would top 3.5 billion dollars, including the China Life and Apple money, and would value the company at more than 25 billion dollars, people familiar with the matter said. Alibaba and Tencent are boosting their investment in the latest round, the people said.
As the two biggest ride-hailing companies scour the globe for capital, a few of the same investors, such as China Life, are putting money into both companies, highlighting strong interest in one of the most promising areas of mobile-internet services.
China-based investment firm Hillhouse Capital Group was an early investor in Didi, but also led a convertible bond deal to invest in Uber’s global operations. Similarly, Tiger Global Management LLC has backed Didi in China and cut a deal in December for an investment in Uber’s global operations.
Competing startups dislike overlapping shareholder bases because they often share confidential strategy and financial results with investors. It is unclear what arrangements Didi and Uber have made for those investors.
The battle for global investment allies has only intensified in recent months. Uber raised 3.5 billion dollars from the investment arm of Saudi Arabia earlier this month as part of a 5 billion dollars financing round, the largest to date raised by a private, venture-backed company.
Uber Technologies received a 3.5 billion dollars infusion from an investment arm of Saudi Arabia as part of a 5 billion dollars investment that is the largest ever for the venture-backed company. WSJ's Lee Hawkins explains.
Didi’s fundraising shows that companies that are market leaders in their categories are gaining access to capital from deep-pocketed strategic investors, even as venture-capital investment in smaller startups in China has been slowing. Venture-capital investments in China’s technology startups—which don’t include strategic investments by the likes of Alibaba and Tencent—fell 28% in the first quarter from a year earlier, according to Hong Kong-based AVCJ Research.
Didi’s 25 billion dollars-plus valuation is more than three times as large as that of Uber’s Chinese affiliate, UberChina, which has been valued at over 8 billion dollars by investors. But Didi is still dwarfed by San Francisco-based Uber, which recently was valued at nearly 68 billion dollars.
While Uber continues its global expansion, Didi has forged alliances with other ride-sharing companies around the world that compete against Uber. Didi has, for example, invested in U.S. ride-hailing firm Lyft Inc. and Singapore-based GrabTaxi Holdings Pte. Ltd., known as Grab.
China is a crucial market for Uber, as it pours billions of dollars into expanding there. It has also run into the greatest competition in that country from Didi, which was formed last year by the merger of two rival Chinese taxi-hailing apps. Today, Didi not only has a larger share of China’s private car-sharing market than Uber, but also dominates the taxi-hailing segment. The two companies disagreed on their market-share figures.
Liu Zhen, senior vice president of strategy at Uber’s Chinese unit, said earlier this month that part of Uber’s new funds raised from Saudi Arabia’s investment arm will flow into its China operations.
Meanwhile, Uber and Didi both have strategic investors in China that can help broaden their reach.
Internet company Baidu Inc., for example, is an investor in UberChina, which lets hundreds of millions of users of Baidu’s popular mobile-map app to hail an Uber ride. Didi, on the other hand, has been working closely with Tencent, operator of the popular WeChat messaging application whose 762 million monthly active users are predominantly in China. WeChat comes with a ride-hailing button that directs its users to Didi’s services.
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