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Didi said to be weighing US$6b SoftBank-backed funding

[HONG KONG] Chinese ride-sharing giant Didi Chuxing is weighing whether to take a US$6 billion investment backed by SoftBank Group Corp that could dilute existing backers such as Apple Inc, people familiar with the matter say.

If the deal goes through, the funding would be the single largest for a Chinese technology startup on record. But the Beijing-based company that ousted Uber from China now needs to balance the interests of its more than 100 investors, including Alibaba Group Holding Ltd and China's sovereign wealth fund, the people said, asking not to be named because the matter is private.

Chinese social media giant Tencent Holdings Ltd and Apple are considering if they should join the investment on a pro-rata basis to avoid a dilution of their stakes, the people said. It's unclear if the money will be coming from the Japanese company itself or its yet-to-close US$100 billion SoftBank Vision Fund.

Didi, which amassed US$10 billion of cash and equivalents last year, will need to decide whether it will take the additional funds as it locks horns with Uber Technologies Inc and Alphabet Inc in the development of driverless technology. The company is currently coping with stringent regulations limiting the number of private cars and drivers it operates, a regulatory uncertainty that may delay its timeline for an initial public offering, people have said.

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Didi spokeswoman Sun Liang, Tencent spokeswoman Canny Lo and Apple spokeswoman Carolyn Wu didn't respond to requests for comment on funding. SoftBank spokesman Matthew Nicholson declined to comment.

Billionaire SoftBank Chairman Masayoshi Son is trying to close the Vision Fund, backed by his own company along with money from Saudi Arabia and Abu Dhabi's Mubadala Development Co, Apple, Qualcomm Inc and Oracle Corp.

Chairman Larry Ellison may invest US$1 billion each in the fund, people familiar with the matter have said. The fund's mandate is to back next-generation technologies, such as artificial intelligence and the internet of things.

SoftBank is already a backer of Didi's but Mr Son may now be doubling down on a bet that technology will transform transportation in China - the same way he gambled on e-commerce giant Alibaba and shifts in domestic consumption.

"The car-hailing business might be limited in market size but if you look at the entire transport industry and possibilities, then Didi is very well positioned," said Zhou Xin, an internet consultant at Beijing-based Trustdata.

"Son bet on Alibaba years ago for the potential consumption upgrade that China would experience, investing in Didi would follow the same philosophy."

Didi, led by chief executive officer Cheng Wei, became China's ride-sharing leader after buying out Uber's domestic operations. As it doesn't charge taxi drivers any fees, the bulk of its revenue comes from taking a commission from rides in private cars and limos- a sector that's been hampered by stricter qualification requirements for drivers and cars.

It won an operating license for the city of Tianjin in March, affirming its right to legally operate in China. But business in cities including Beijing and Shanghai remains dogged by stricter rules that, for example, require drivers to have local residency to operate.

The company also needs capital to expand its research efforts in autonomous car technologies, an area in which the tech industry's largest companies - including Uber and Alphabet - are pouring resources. Didi wants to take advantage of data on 300 million users across some 400 cities. The four-year-old company opened an artificial intelligence lab in Mountain View, California this month. Called Didi Labs, it's already lured dozens of stalwarts in the field including former Uber auto-security expert Charlie Miller, known for remotely hacking into a Jeep Cherokee in 2015.

Prior to SoftBank, the Chinese ride-sharing raised billions of dollars in several rounds and is said to be valued at about US$34 billion. In addition to Apple and Tencent, Didi's other backers include China International Capital Corp and Russia's DST Global.