Online travel agency Booking Holdings has invested $500m in China-based on-demand ride service Didi Chuxing as part of a strategic partnership agreement, as the latter company prepares to spin off its automotive services arm.
Didi Chuxing operates a ride hailing platform with more than 550 million registered users that provides some 30 million rides per day, covering a range of options including taxis, buses, minibuses, designated driver services, corporate lifts, bicycle rental and food delivery.
Booking Holdings, which was previously known as Priceline Group, provided the funding in connection with a strategic partnership that will allow it to offer ride hailing services powered by Didi through its various properties, which include Booking.com, Priceline, Kayak, Cheapflights and OpenTable.
Didi customers will meanwhile be able to book hotels through Booking Holdings subsidiaries Booking.com and Agoda.
Stephen Zhu, Didi Chuxing’s vice-president for strategy, said: “Building on its leadership and expertise in the global online travel market, Booking is championing a digital revolution of travel experience.
“We look forward to seamlessly connecting every segment of the journey and improving everyone’s travelling experience through more collaborative innovation with the Booking brands on product, technology and market development.”
Todd Henrich, head of corporate development for Booking Holdings, added: “Didi has clear advantages in technology and scale in the shared mobility industry.
“We believe that together we can offer smarter transportation services to our brands’ customers, and help Didi’s customers with seamless access to the products and services the brands in our company provide throughout the world.”
The deal was announced as people with direct knowledge of the matter told Reuters that Didi also plans to spin off its car services unit, which it currently values at between $2bn and $3bn, in an initial public offering sized between $1bn and $1.5bn.
SoftBank, the telecommunications and internet group that backed Didi’s last round, in December 2017 at a $56bn valuation, has been approached to take part in the offering, the sources said, though they did not specify what the firm’s participation would involve.
The unit, which was launched in April this year, provides access to services such as car rental, sharing, sales, refuelling, maintenance and repair services provided by some 5,000 partners across more than 200 Chinese cities.
Booking Holdings’ investment increased Didi’s total debt and equity financing to approximately $17.7bn, and a the Wall Street Journal reported in April this year that the company is considering an IPO of its own as soon as this year at a valuation of up to $80bn.
SoftBank and Abu Dhabi-owned sovereign wealth fund Mubadala Investment Company supplied the company’s last funding, invested $4bn in December, eight months after the former put up $5bn of a $5.5bn round that included Silver Lake Kraftwerk and financial services firms China Merchants Bank and Bank of Communications.
Didi Chuxing was formed by the merger of rivals Didi Dache and Kuaidi Dache in 2015, at which point they had raised a combined $1.55bn from SoftBank, e-commerce firm Alibaba, internet group Tencent, car rental service eHi, DST Global, Matrix Partners, Tiger Global Management, New Horizon Fund, GSR Ventures and Citic PE.
The merged company secured $3bn just after the deal closed, getting the cash from Alibaba, Tencent and Ping An Ventures, the corporate venturing arm of insurance firm Ping An, as well as China Investment Corp, Temasek, Capital International Private Equity Fund and Coatue Management
Alibaba and its financial services affiliate Ant Financial joined SoftBank, Tencent, electronics producer Apple, insurance group China Life and asset manager BlackRock for a $4.5bn equity round for Didi the following year that was closed at a $28bn valuation together with $2.8bn in debt financing.