China's homegrown ride-hailing service is getting an influential
backer in its battle against Uber Technologies Inc.: China
Investment Corp.
China Investment Corp., the country's sovereign-wealth fund, has
made a commitment to invest in Didi Kuaidi Joint Co. as part of its
recent fundraising round, according to people familiar with the
situation. The Didi Kuaidi fundraising round had a "first closing"
last month of $2 billion, valuing the Chinese ride-hailing app at
$15 billion. At that time, Didi Kuaidi said it was looking to raise
"a further few hundred million dollars from new investors before
the final closing in the coming month."
Many companies covet an investment from China Investment Corp.
because it carries the imprimatur of China's government. CIC has
rarely invested in Chinese technology companies, but did lead an
investment in Alibaba Group Holding Ltd. as the Chinese e-commerce
giant bought back a large stake in itself from Yahoo! Inc. in 2012.
That investment, ahead of Alibaba's giant $25 billion initial
public offering in New York last year, proved to be very profitable
for the Chinese sovereign-wealth fund. Alibaba is also an investor
in Didi Kuaidi.
The fundraising is part of Didi Kuaidi's escalating battle with
Uber to win over global investors and investors in China. Uber just
completed raising nearly $1 billion from investors including
Microsoft Corp. in a new round that valued the global ride-hailing
leader at close to $51 billion, people familiar with the situation
said earlier. That fundraising was for its global operations and
made it the most valuable startup in the world, passing Chinese
smartphone maker Xiaomi Corp. Uber is also raising money separately
for its China unit, UberChina, to expand in the country. China's
top search engine Baidu Inc. is an investor in Uber and its
strategic partner in China.
Didi Kuaidi, which was formed by the $6 billion merger of two
competing taxi-hailing apps in February, has emerged as one of
China's hottest startups. It claims to have captured over 80% of
China's premium car-hailing service market and over 90% of the
taxi-hailing service market within China. It also boasts the
support of China's two most powerful Internet companies, Alibaba
and Tencent Holdings Ltd., which had separately backed the two
competing taxi-hailing apps that merged to form Didi Kuaidi.
The investment from China Investment Corp. gives Didi Kuaidi a
backer with even deeper pockets than Alibaba and Tencent.
CIC managed over $740 billion worth of assets at the end of last
year. Its portfolio includes holdings in the country's big domestic
financial institutions and a more diversified set of overseas
investments in bonds, stocks, and global fund commitments. It has
made big bets on U.S. financial giants Morgan Stanley and
Blackstone Group LP, as well as placing funds with outside
managers.
CIC earned an annualized return of 5.7% on its overseas
portfolio from its launch in September 2007 to the end of last
year.
Write to Rick Carew at rick.carew@wsj.com
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