Weibo announces US$142m investment in Chinese car-hailing giant Didi Kuaidi
Market-leading mainland Chinese taxi and car-hailing app Didi Kuaidi has closed a US$142 million investment from social media company Weibo.
The funding was announced in a filing by Nasdaq-listed Weibo earlier this week. Weibo said it had agreed "to invest US$142 million in Didi Taxi and Kuaidi Taxi in their latest round of equity financing, through their Cayman Islands holding company, Xiaoju Kuaizhi".
The merger of China's two largest taxi apps was announced in February and has yet to gain regulatory approval. Valued at more than US$6 billion, the combined company has more than 1.35 million drivers operating in 360 Chinese cities, with a market share of around 99 per cent.
Didi and Kuaidi are backed by Chinese internet giants Tencent and Alibaba respectively.
Weibo said on Wednesday that the investment demonstrated its "high expectations" for the online-to-offline industry, in which Didi Kuaidi is a major player.
"The co-operation is likely to help Weibo boost its revenue, as the company will benefit from the increased daily transactions in taxi-hailing service," Qi Xu, an analyst for Beijing-based consultancy iResearch, told state media.
Asian spending on mobile commerce overtook the US in 2014, according to Tim Merel, managing director of San Francisco-based research firm Digi-Capital.
"By 2018, Asian users will account for almost half of over US$600 billion spent on goods and services using mobile devices," Merel said.
As of March, the service had 195 million monthly active users, but Weibo has struggled to generate revenue to match its user numbers or recreate the massive growth it saw in its heyday around 2012.
"Weibo has been trying to figure out how to convert its website traffic into revenue and the co-operation with the taxi-hailing service could be an opportunity," said Analysys International researcher Zhang Xu.
The microblogging service reported revenues of US$96.3 million in the first quarter of 2015, up from US$67.5 million last year.
Last week, Didi Kuaidi announced that it would spend upwards of US$160 million on promotional rides as it seeks to expand its private car hire service in the face of competition from US rival Uber and Baidu-backed Yidao Yongche.
That it was willing to spend so much demonstrated the value that Didi Kuaidi placed on the taxi and private car hire market, according to company president Jean Liu.
“We think that it's a trillion-dollar market covering consumers' travel needs in both taxis and private cars,” she said.