The Chinese affiliate of Uber Technologies Inc. is close to securing about $1 billion in new funding from investors in the region, part of the ride-hailing company's rivalry with deep-pocketed Chinese rival Didi Kuaidi Joint Co.

Investors have agreed to funding that would value UberChina at about $7.5 billion, according to a person familiar with the matter. The final paperwork has been signed but it could take several weeks for the round to officially close, the person said.

Reuters earlier reported the funding for UberChina, which is majority owned by Uber but also has outside investors.

Winning the support of local investors may help Uber build allies in China, its largest market outside the U.S. and the site of its fiercest competitive battle. Didi Kuaidi, backed by China's leading Internet companies Alibaba Group Holding Ltd. and Tencent Holdings Ltd., has raced with Uber to add millions of drivers and passengers by subsidizing the cost of trips and doling out cash incentives to drivers.

Uber's chief executive earlier this year called China the company's top global priority and said it plans to spend $1 billion this year to expand in the country.

By setting up a separate, locally-funded operation, Uber aims to win the support of the Chinese government, which has historically created obstacles to expansion in the region for U.S. technology companies.

Uber formed a strategic partnership with China's Baidu Inc. last year that included an investment in Uber's China operations. Uber's service in China uses Baidu's mapping and payments service.

A spokeswoman for Uber declined to comment on the funding.

Uber's Chinese investors include Hillhouse Capital Group, one of the biggest fund managers in Asia, which in June led a round of funding in Uber's global operation involving bonds that convert into shares at a discount to the price in a potential Uber initial public offering.

Hillhouse also invested in ride-sharing service Didi Dache ahead of its $6 billion merger with rival Kuaidi Dache in February.

Didi Kuaidi, the merged homegrown rival in China, last month raised $2 billion from investors in a round of funding valuing it at roughly $15 billion, people familiar with the matter told The Wall Street Journal. It is currently working on securing additional capital in a "second closing" of the round expected to be completed in the next few weeks, potentially bolstering the startup's war chest by up to $1 billion from investors including sovereign-wealth fund China Investment Corp., people familiar with the matter said. Didi Kuaidi didn't immediately respond to a request for comment.

In June, Hillhouse led a separate round of funding in Uber's global operation involving bonds that convert into shares at a discount to the price in a potential Uber initial public offering. Uber hasn't publicly discussed any plans for an IPO and is looking for a chief financial officer who would be a key player in the deal.

Write to Douglas MacMillan at douglas.macmillan@wsj.com and Rick Carew at rick.carew@wsj.com

 

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(END) Dow Jones Newswires

August 27, 2015 16:15 ET (20:15 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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