Didi close to raising US$1.5b for trucking unit

[BEIJING] Didi Chuxing Technology is close to finalising a US$1.5 billion round of funding for its on-demand trucking unit from investors including Temasek Holdings, surpassing its fundraising target as investors count on a Chinese economic recovery to fuel shipping.

Jack Ma's Yunfeng Capital and IDG Capital will join the financing for Didi Freight, an Uber-like trucking service, a person with knowledge of the matter said. Other investors in the unit's debut round include the investment arm of real estate giant Country Garden Holdings, a unit of CITIC and Hidden Hill Capital, the person said, asking not to be identified discussing a private deal. The total amount exceeded its target of about US$400 million by several-fold.

China's economy roared back to pre-pandemic growth rates in the fourth quarter after its industrial engines fired up to meet surging demand for exports. That boom is straining a domestic logistics network already taxed by a post-Covid 19 resurgence in e-commerce. Startups like Full Truck Alliance - backed by SoftBank Group - and tech giants such as Alibaba Group Holding are now introducing technology to try and streamline the shipping process, connecting merchants with truckers and delivery firms.

Didi first launched its on-demand logistics service in Chengdu and Hangzhou in June and has since expanded to eight cities, handling more than 100,000 orders daily on average. Backed by Tencent Holdings and SoftBank, the Chinese startup is taking on larger rivals including Full Truck Alliance - known by its Chinese name Manbang - and Huolala in an already crowded market. Huolala raised US$515 million from investors including Sequoia and Hillhouse. Full Truck Alliance raised US$1.7 billion from investors including SoftBank and Tencent about a month before that.

Didi Freight represents one of the key growth initiatives for a ride-hailing giant seeking to diversify from its traditional business. Didi is also ramping up its autonomous driving unit as well as robo-taxi service.

BLOOMBERG