Uber's China Unit Raises Funding at $7 Billion Valuation

Uber Technologies Inc. said Monday it has raised fresh funds that value its expanding China unit at $7 billion, bringing in local partners to aid its battle with a homegrown Chinese rival.

The global ride-hailing leader, which is locked in a fierce battle with Chinese startup Didi Kuaidi Joint Co. for market share, said it now counts Chinese airline operator HNA Group, car maker Guangzhou Automobile Co. Group, and China's biggest life insurer China Life Insurance as investors in its China unit, UberChina.

China is the rare global market where the U.S. tech company lags behind a local rival. Uber Chief Executive Travis Kalanick has made China a focal point for his company's rapid global expansion, earmarking $1 billion last year for that country alone and setting up an independent Chinese entity, UberChina, with local search-and-mapping company Baidu Inc.

Uber said the $7 billion valuation for its Chinese unit is before the additional funds raised from UberChina's second round, which follows a first round of fundraising last year that netted $1.2 billion to fund its expansion plans. Mr. Kalanick disclosed the Chinese investors in a speech he gave in Beijing.

Local ride-hailing rival Didi Kuaidi, which was formed by the merger of two competing taxi apps early last year, has proven itself to be a formidable challenger to Uber in both raising money and operationally. Didi Kuaidi closed a $3 billion round of funding last year at a $16 billion valuation in the biggest ever single placement raised by a venture capital-backed startup. It counts China's top two Internet companies, e-commerce giant Alibaba Group Holding Ltd. and messaging-and-gaming leader Tencent Holdings Ltd., as major shareholders.

The two sides in the Chinese ride-sharing war have sought to bring big local partners to its side to give them a leg up in funding and expanding operations. Uber garnered support from two Chinese deep-pocketed insurers, China Life and China Taiping Insurance, while Didi Kuaidi has found support from $740 billion sovereign-wealth fund China Investment Corp. and Chinese financial conglomerate Ping An Insurance (Group) Co.

Both companies have spent much of the funding raised on subsidies to attract Chinese drivers and riders to their competing services. Uber has found some success with its private car offerings and Didi Kuaidi dominates the local taxi-hailing business.

Didi Kuaidi has also attacked Uber on its home turf by investing $100 million Uber's primary U.S. rival Lyft Inc. The Chinese company, along with other Asian ride-hailing companies, have formed an alliance, known in tech circles as the "anti-Uber alliance," to allow users of each app to hail rides from using their home country's app while traveling abroad. That is expected to help counter Uber's appeal to jet-set travels, giving them a more familiar local interface and payment options when they go overseas.

In December, The Wall Street Journal reported that Uber is in the midst of raising as much as $2.1 billion in a round that could value the company at up to $64.6 billion, which would be the highest for a private venture-backed company on record.

(END) Dow Jones Newswires

January 11, 2016 14:05 ET (19:05 GMT)

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