SoftBank is investing an additional $1.6 billion in Didi Chuxing despite the Chinese ride-hailing giant’s mounting losses, which touched 10.9 billion yuan ($1.61 billion) last year, chairman and CEO Masayoshi Son said.
Son mentioned SoftBank’s additional investment in Didi Chuxing, its third in the ride-hailing firm, in an interview with CNBC. The Didi investment was first spotted by KrAsia.
“Even Didi, alone, we’re investing $1.6 billion or something as the additional investment to our earlier round. So, we’ve put — maybe twice and this is maybe the third round that we are investing. And– it’s just for additional, you know– injection of capital, ourselves. One ticket is $1.6 billion or something,” Son said in the CNBC interview.
It remains unclear, however, if the investment will be made by SoftBank Group Corp or the Vision Fund. SoftBank has previously revealed its plan to transfer its ride-hailing stakes — these include stakes in Uber, India’s Ola and Southeast Asia’s Grab — to the Vision Fund but no progress on this front has been reported so far.
SoftBank first invested in Didi Chuxing’s $4.5-billion funding round in 2016 and then made an additional investment in 2017 when it backed the Chinese firm’s $4-billion round.
Son admits that Didi Chuxing and other players in the ride-hailing industry are not making money yet but stressed that these firms are growing quickly.
“So, there, the margin, pay grade, is 20% or more. So, it’s actually very reasonable, very profitable business. It’s just that they’re growing so rapidly that a customer– initial customer acquisition cost, the creating infrastructure, those are the initial investment,” he said.
In February, Chinese tech news site 36kr reported that Didi Chuxing had incurred losses of up to 10.9 billion yuan ($1.61 billion) in the fiscal year 2018 due to heavy spending on training and recruitment of skilled drivers.
According to the report, the ride-hailing giant spent a total of 11.3 billion yuan ($1.67 billion) on incentives to attract qualified drivers with at least three years of driving experience and no criminal record.