Uber's China Unit Raises Funding at $7 Billion Valuation
January 11 2016 - 2:20PM
Dow Jones News
Uber Technologies Inc. said Monday it has raised fresh funds
that value its expanding China unit at $7 billion, bringing in
local partners to aid its battle with a homegrown Chinese
rival.
The global ride-hailing leader, which is locked in a fierce
battle with Chinese startup Didi Kuaidi Joint Co. for market share,
said it now counts Chinese airline operator HNA Group, car maker
Guangzhou Automobile Co. Group, and China's biggest life insurer
China Life Insurance as investors in its China unit, UberChina.
China is the rare global market where the U.S. tech company lags
behind a local rival. Uber Chief Executive Travis Kalanick has made
China a focal point for his company's rapid global expansion,
earmarking $1 billion last year for that country alone and setting
up an independent Chinese entity, UberChina, with local
search-and-mapping company Baidu Inc.
Uber said the $7 billion valuation for its Chinese unit is
before the additional funds raised from UberChina's second round,
which follows a first round of fundraising last year that netted
$1.2 billion to fund its expansion plans. Mr. Kalanick disclosed
the Chinese investors in a speech he gave in Beijing.
Local ride-hailing rival Didi Kuaidi, which was formed by the
merger of two competing taxi apps early last year, has proven
itself to be a formidable challenger to Uber in both raising money
and operationally. Didi Kuaidi closed a $3 billion round of funding
last year at a $16 billion valuation in the biggest ever single
placement raised by a venture capital-backed startup. It counts
China's top two Internet companies, e-commerce giant Alibaba Group
Holding Ltd. and messaging-and-gaming leader Tencent Holdings Ltd.,
as major shareholders.
The two sides in the Chinese ride-sharing war have sought to
bring big local partners to its side to give them a leg up in
funding and expanding operations. Uber garnered support from two
Chinese deep-pocketed insurers, China Life and China Taiping
Insurance, while Didi Kuaidi has found support from $740 billion
sovereign-wealth fund China Investment Corp. and Chinese financial
conglomerate Ping An Insurance (Group) Co.
Both companies have spent much of the funding raised on
subsidies to attract Chinese drivers and riders to their competing
services. Uber has found some success with its private car
offerings and Didi Kuaidi dominates the local taxi-hailing
business.
Didi Kuaidi has also attacked Uber on its home turf by investing
$100 million Uber's primary U.S. rival Lyft Inc. The Chinese
company, along with other Asian ride-hailing companies, have formed
an alliance, known in tech circles as the "anti-Uber alliance," to
allow users of each app to hail rides from using their home
country's app while traveling abroad. That is expected to help
counter Uber's appeal to jet-set travels, giving them a more
familiar local interface and payment options when they go
overseas.
In December, The Wall Street Journal reported that Uber is in
the midst of raising as much as $2.1 billion in a round that could
value the company at up to $64.6 billion, which would be the
highest for a private venture-backed company on record.
(END) Dow Jones Newswires
January 11, 2016 14:05 ET (19:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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