Alibaba Group Holdings Ltd. is partnering with its Internet finance affiliate Ant Financial Services Group, which operates the payments platform Alipay, to invest an additional US$400 million in Didi Chuxing, the Chinese ride-sharing services firm.
In a report from Tencent Technology, it was observed that there was a lack of clarity on whether this transaction was part of a $2.5 billion funding round or a separate investment from the current round that Didi Chuxing is attempting to raise.
Currently, Alibaba hold a 10 per cent equity position in Didi Chuxing after February 2015, following the merger of Didi Dache and competitor Kuaidi Dache to form Didi Kuaidi, which eventually re-branded to Didi Chuxing. The stake is the outcome of a $445 million investment Alibaba made in Kuaidi Dache prior to the merger.
The proposed investment by Alibaba will see a planned capital commitment of $200 million, while its Internet finance arm Ant Financial will invest $200 million, both via subscribing to preferred shares of Didi Chuxing. This investment comes in the wake of Ant Financial securing an investment of $4.5 billion,
The investment by Ant Financial is linked to its planned acquisitions of target firms dealing in domestic IT infrastructure and rural-financial services, as well as international markets. It also follows moves to strengthen and consolidate its position prior to an initial public offering (IPO) on a stock exchange.
Alibaba decided to make the capital commitment, which follows a decision to divest its stake in mobile app-based chauffeured car service provider Ucar Group, following a $461 million in the Didi Chuxing competitor.
Alibaba’s has also made investments in local service O2O (online-to-offline) platform Koubei, in which it has invested RMB 3 billion as of 31 March 2016. Alibaba and Ant Financial each out a 49.6 per cent stake, with the remaining 0.8 per cent owned by an independent food & beverage corporation.
Meanwhile Ele.me has received an aggregate investment of $1.25 billion from Alibaba and Ant Financial. Alibaba and Ant Financial invested $1.25 billion in venture-backed Ele.me, with Alibaba investing US$900 million into Ele.me for a 22 per cent stake.
With the recent Apple investment of $1 billion, the investment by Alibaba and Ant Financial is likely targeted at leveraging on the nature of the billing relationship that ride-sharing apps share with their users, in that financial transactions are a core part of their use and can help to provide insights into consumer behaviour for Ant Financial and Alibaba.