BIDU Baidu Inc

HONG KONG—Investors in China's homegrown competitor to Uber Technologies Inc. have revved up the ride-sharing company's valuation to more than $25 billion.

Beijing-based Didi Kuaidi Joint Co. is close to completing its latest funding round to raise more than $1.5 billion at a valuation of over $25 billion, according to people familiar with the situation.

Didi Kuaidi's biggest existing backers, social-network company Tencent Holdings Ltd. and online shopping giant Alibaba Group Holding Ltd., are participating in the latest round, the people said.

The Chinese startup received strong demand from new and existing investors and expects to complete the round by the end of this month, according to the people.

In February, The Wall Street Journal reported that Didi Kuaidi was planning to raise about $1 billion from investors on terms that would value the Chinese car-hailing company at more than $20 billion.

While many global startups including some in Silicon Valley have had difficulty raising money amid a slowdown in the global economy, Didi Kuaidi has been an exception. Its valuation has soared from just $6 billion in February 2015 when it was formed from the combination of two competing taxi-hailing companies. Investors are betting that the company will be able to eventually turn a profit after attracting more Chinese riders to its service.

The latest fundraising comes as growth in private funding for China's tech sector is slowing, as investors become more cautious due to volatility in China's stock market and slowing economic growth. In the past six months, such funding amounted to roughly $4.5 billion, smaller than the $6.7 billion raised in the previous six months, according to data from Hong Kong-based AVCJ Research. While more fresh capital is flowing into leading players in each category such as Didi Kuaidi, startups that aren't dominating their segments are struggling to raise new funds, venture capitalists say.

China's biggest Internet companies have taken sides in the battle for the country's ride-hailing market. While Didi Kuaidi's investors include Tencent and Alibaba, investors in UberChina, Uber's Chinese affiliate, include Baidu Inc., China's biggest search provider.

In China's fast-growing market for ride-sharing, Didi Kuaidi and UberChina are locked in a fierce battle to attract riders and investors. Both companies are providing huge subsidies to drivers and riders to sign up for their services.

Didi Kuaidi dominates the country's taxi-hailing market, and has a larger share than UberChina in the private-car-hailing segment, though the two companies disagree on the exact figures. Didi Kuaidi has expanded its private-car services to compete more directly against Uber, while adding other services such as buses and chauffeurs who drive customers' own vehicles. As of January, Didi Kuaidi was operating in more than 400 cities in China.

UberChina last year raised $1.2 billion at a valuation of more than $8 billion. Didi Kuaidi's new round of fundraising comes after it raised $3 billion from investors in September at a valuation of $16 billion.

Didi Kuaidi has been working closely with Tencent, the operator of the WeChat messaging application. The app, which has about 700 million monthly active users, comes with a ride-hailing button that directs users to Didi Kuaidi's service. Users can pay for rides with WeChat's own mobile-payment service.

Didi Kuaidi is also backed by sovereign-wealth fund China Investment Corp., with $740 billion in assets, and the venture-capital arm of Chinese financial conglomerate Ping An Insurance (Group) Co. UberChina is backed by major Chinese insurers China Life Insurance (Group) Co. and China Taiping Insurance Holdings Co.

Write to Juro Osawa at juro.osawa@wsj.com, Kane Wu at Kane.Wu@wsj.com and Rick Carew at rick.carew@wsj.com

(END) Dow Jones Newswires

April 07, 2016 04:55 ET (08:55 GMT)

Baidu (NASDAQ:BIDU)
Historical Stock Chart
From Aug 2024 to Sep 2024

Baidu (NASDAQ:BIDU)
Historical Stock Chart
From Sep 2023 to Sep 2024