By Rick Carew and Mia Lamar
HONG KONG--The Chinese homegrown competitor to Uber Technologies
Inc. is enlisting big new investors including the private equity
arm of Los Angeles-based money manager Capital Group Cos. in its $2
billion fundraising round, according to people familiar with the
situation.
Capital International Private Equity Funds and Chinese insurer
Ping An Insurance (Group) Co. of China are among the investors
participating in Didi Kuaidi Joint Co.'s fundraising, which could
value the Chinese ride-hailing startup at around $15 billion,
according to these people.
Chinese ride-hailing startup Didi Kuaidi Joint Co.'s fundraising
will be among the largest equity fundraisings for a venture-backed
company in a single private placement, according to Dow Jones
VentureSource. Didi's competitor Uber Technologies collected $2.8
billion in a fundraising round this year, while Chinese e-commerce
giant Alibaba Group Holding Ltd. raised $1.6 billion in 2011.
Capital Group is best known for its American Funds family of
mutual funds. The private-equity business focuses on emerging
markets and has spawned six funds with total commitments of nearly
$7 billion, according to its website.
China's ride-hailing market is a two-horse race. Uber last month
started formal fundraising specifically for its China operation,
UberChina. The U.S. company is also raising money from big Chinese
fund manager Hillhouse Capital Group in a convertible-bond deal
based on a discount to its future initial public offering price,
people familiar with the situation said earlier. Beijing-based
Hillhouse Capital, which is also an investor in Didi Kuaidi, is
investing in Uber's global operations, not its local China
operation.
Didi Kuaidi and UberChina, both of which spend huge sums on
subsidies to entice drivers and riders, want to raise fresh capital
to spend on luring traffic to their services. Didi Kuaidi's backers
include Chinese e-commerce company Alibaba Group Holding Ltd. and
Tencent Holdings Ltd. Uber formed a strategic partnership with
Chinese search engine 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.
Existing investors in Didi Kuaidi are also participating in the
Chinese startup's fundraising and are likely to make up a large
portion of the deal, according to people familiar with the
situation. That strong demand, which Didi said in an earlier
investor letter was oversubscribed in five days, could push the
size of the fundraising round above its original target. One person
familiar with the situation said the final size of the fundraising
round could be as large as $2.5 billion.
Didi Kuaidi's daily private car-requests have tripled since May
to 3 million-by its calculations, an 80% share of the Chinese
market, it said in the investor letter, while it says its app is
used for 3 million daily taxi rides, giving it nearly all of the
taxi-app market. The company operates across more than 360 Chinese
cities.
Uber chief executive Travis Kalanick said in a June investor
letter that Uber believes it has captured close to half of the
non-taxi ride-hailing market in China, with customers completing
almost 1 million trips a day.
Neither set of figures has been audited by outside parties, and
the uncertainty is deepened by the fast-growing nature of the
market and the different metrics used by the two companies. To
attract investor funds, both companies are jockeying to be seen as
a leader in China.
Write to Rick Carew at rick.carew@wsj.com and Mia Lamar at
mia.lamar@wsj.com
Access Investor Kit for Ping An Insurance (Group) Co. of China
Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CNE000001R84
Access Investor Kit for Ping An Insurance (Group) Co. of China
Ltd.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=CNE1000003X6
Subscribe to WSJ: http://online.wsj.com?mod=djnwires