Uber’s China rival Didi Kuaidi may join Ola fundraising
MUMBAI: The Uber vs Ola war is about to get more intense, and maybe even spill beyond the streets of India. Didi Kuaidi, China’s largest taxi-aggregator app, which is backed by Alibaba, the internet behemoth, is learnt to be investing in homegrown Ola, giving both players greater firepower to take on Uber.
Didi’s investment in Bangalore-headquartered Ola comes close on the heels of it picking up stakes in San Francisco-based Lyft and Malaysia’s GrabTaxi, signalling a global alliance against the cash-rich Uber.
People close to the development told TOI that Ola, formerly Olacabs, is finalising the second tranche of $200 million of its $500 million financing round led by GIC, Singapore’s sovereign wealth fund, Didi Kuaidi, and Baillie Gifford, a Scottish investment firm which is a shareholder in Flipkart, valuing the Indian cab-hailing app at $5 billion.
GIC, which put a small amount when Ola scored $400 million led by DST Global earlier this year, is expected to pump as much as $100 million this time around while Didi may invest around $30 million. Russian billionaire Yuri Milner’s DST Global is also likely to participate in the latest round, sources said. TOI had reported first, in its August 10 edition, about New York-based hedge fund Falcon Edge, Softbank Corp and Tiger Global putting the first chunk of $300 million into Ola.
Separate email queries sent by TOI regarding the financing round to Bhavish Aggarwal, co-founder & CEO of Ola, Didi Kuaidi, GIC and Baillie Gifford did not elicit a response till the time of going to press.
“There’s a lot of interest in this round and it may even get oversubscribed. As of now it’s likely to close at $500 million. Things are still to be worked out fully,” said a person privy to the matter. Even as Ola builds a bigger war chest, there have been talks of the Travis Kalanick-led Uber looking to raise $1 billion for India separately, just like it racked up $1.2 billion for China recently, two markets which are of enormous significance for the company. Uber, the most-valued tech startup worldwide at $51 billion also became the youngest privately-held company to cross the $50 billion valuation mark beating Facebook’s record in July this year.
Despite being buffeted by regulatory hurdles, both Ola and Uber have been aggressively rolling out new services, discounting, announcing millions in investments along with introducing driver initiatives as competition to corner market share intensifies in Asia’s third largest economy which has seen smartphone usage grow exponentially. The five-year-old Ola, which came to life in Mumbai, presently leads the domestic taxi app market and claims to be doing as many as 750,000 rides a day while Uber said while announcing its $1 billion investment plan for India that it aims to touch 1 million rides over the next 9 months from the present 200,000. Ola’s pole position got cemented earlier this year when it acquired its smaller rival TaxiForSure (TFS).
A month before Ola acquired TFS in India, China’s largest taxi-hailing app Didi Dache, backed by internet conglomerate Tencent Holdings and its closest competitor Kuaidi Dache, with investors like Alibaba, SoftBank and Tiger Global, merged to form a $6-billion transportation powerhouse. Didi Kuaidi is presently valued at $16 billion and is Uber’s biggest competitor worldwide having raised $4.4 billion in investor money. The Chinese taxi app has been aligning all of Uber’s rivals together to fight out the San Francisco-headquartered transportation startup which is spread across 300 cities globally.
India’s taxi market, estimated at over $10 billion in size, is largely unorganized but is fast changing with the advent of asset-light, aggregator services backed by technology. Buoyed by increased smartphone usage, the 300-million strong internet user base in India is the next big opportunity for investors after China.