US-based ride hailing company Uber is in the process of raising up to $1bn in convertible bond funding led by fund manager Hillhouse Capital, the Wall Street Journal reported yesterday.
The bonds would be converted to stock at the time of Uber’s initial public offering at a discount to its IPO price, people familiar with the situation told WSJ. One source added that while the size of the round could be “roughly” $1bn, it would more likely be in the nine figures.
China-based Hillhouse’s interest in Uber is likely linked to the latter company’s desire to expand in the country. It intends to spend up to $1bn in 2015 to grow its Chinese market share.
Uber received $600m in funding from China-based internet company Baidu in December 2014, and has set its sights on surpassing Didi Kuaidi, which currently has about 95% of China’s market share in the sector.
Hillhouse is also an investor in Didi Kuaidi, having provided an undisclosed amount of funding in January 2015. It is also among the shareholders of Singapore-based taxi ordering app GrabTaxi.
Uber has already raised about $5.9bn in debt and equity from backers also including diversified internet company Google, Sequoia Capital, TPG, Fidelity Investments, Wellington Management, Kleiner Perkins Caufield & Byers, Menlo Ventures, CrunchFund, Goldman Sachs, Lowercase Capital, First Round Capital and Innovation Endeavors.
Reports last month suggested the US-based company planned to raise between $1.5bn and $2bn in its next round at a $50bn valuation, but the terms of the latest financing suggest it will also seek to go public at some point soon, as the debt will grow the longer it remains private.