Chinese bike-sharing start-up Ofo raises US$866 million in move that staves off merger calls
Chinese bike-sharing start-up Ofo said it has secured US$866 million in a new round of financing led by Alibaba, a move that should stave off calls for it to merge with Tencent-backed rival Mobike.
This new round is so far the biggest in China’s ruthlessly competitive bike-sharing sector. Last July Ofo received E round financing of US$700 million led by Alibaba, while Mobike’s latest round was US$600 million in a Series E round led by Tencent Holdings last June.
“As the global leader in the bike-sharing sector, Ofo has been transitioning from a phase of rapid growth to a stage of high-quality development,” said Dai Wei, founder and CEO.
The bike sharing market in China has undergone significant consolidation, with more than 20 start-ups going bust as of last month, according to the country’s Transport Ministry. Ofo and Mobike together account for 90 per cent of the market, according to research firm Cheetah Global Think Tank.
Ofo, founded in 2014, said it has accumulated almost 200 million users in China and operates in 20 overseas countries including the US, UK, France and Singapore.
The latest financing makes Alibaba a major shareholder in Ofo. Before this round, Chinese ride-hailing giant Didi Chuxing was Ofo’s biggest investor. In January, Didi took over Bluegogo, which was at the time the third-largest bike sharing company in China.
Analysts said the new financing of Ofo would postpone its long-rumoured merger with Mobike, which has a valuation of US$1.5 billion.
Mobike is reportedly seeking a new round of financing from Chinese e-commerce conglomerate Meituan. Due to fierce price wars designed to gain market share, neither of the two bike sharing companies have been able to turn a profit.