Didi-Kuaidi

Didi Dache-Kuaidi Dache, China’s largest taxi-hailing startup which is said to account for more than 90 percent of the market share, has just revealed a US$142 million investment from Weibo, a SEC filing of the Twitter-like social network. Weibo said in the filing the investment will be made through its Cayman Islands holding company Xiaoju Kuaizhi Inc.

This investment comes on heel of a merger between Didi and Kuaidi in Feb this year. The valuation of the combined company is estimated to be around US$8.75 billion, Wall Street Journal reported. Although the merger is still pending regulatory approval, it is widely-acclaimed by the industry as a means to end the money-burning wars between China’s largest taxi apps.

This latest investment strengthens the new Kuaidi-Didi coalition, meaning that American entrant Uber and Chinese contender Yongche, have a challenging fight ahead. DiDi Dache, which still runs as an independent brand after the merger, announced a 1 billion yuan (US$161 million) subsidiary program in May, to offer free rides to users in 12 cities every Monday. Chinese car rental and ride-booking service Yongche announced one day before that it will offer free rides to every user on May 21st every year.

Financing support has become a prominent factor in the battle to win supremacy in the ride-sharing market. The new investment raised concerns among industry insiders that Didi Dache-Kuaidi Dache’s growth is solely dependent on investments as both companies have only very recently made moves to monetise.

However according to an insider cited by Chinese state media “Both Didi and Kuaidi have secured hefty investments before the merger and the money is sufficient to support their development. This allows them to consider more factors like cooperation opportunities when choosing partners rather than only for money.”

The tie-up between Weibo and Didi Dache-Kuaidi Dache is not so surprising since Alibaba owns an 18 percent stake in Weibo, and also stakes in the merged company through its investments in Kuaidi Dache.

Weibo spun off from Sina and went public in the U.S. last April as Weibo Inc. But, people would find it is difficult for Weibo to expand monetization approaches beyond advertising. Investment in Didi-Kuaidi may help Weibo to better commercialize its user base by providing value-added service for transportation.