Didi Chuxing’s (滴滴出行) acquisition of Uber Technologies Inc’s China business last week reshapes the landscape in Asia’s growing ride-hailing sector and leaves India’s Ola more vulnerable to attack by Uber in its US$12 billion home market.
Four months ago, Ola executives met with Didi hoping the Chinese firm would invest fresh capital to help it fight Uber, which, with its deeper pockets, has made rapid inroads into India.
They were told Didi wanted to first sort out its own challenges in China, a person with direct knowledge of Ola’s plans said.
Didi and Uber have raised and spent billions of US dollars in a discount slugfest to win drivers, passengers and market share in China.
Didi, now worth about US$35 billion, last year invested about US$30 million in Ola, which is also backed by Japan’s Softbank Group Corp, and the two are allies in an anti-Uber group that also includes US-based Lyft and Southeast Asia-focused Grab.
“This [Didi-Uber China] deal changes the dynamics of how they [Didi] will invest in India,” said the person, who did not want to be named, because the discussions were private.
If Didi invests more in Ola, it would effectively be betting against Uber, its new partner in China, the person said.
It was not clear whether Didi would provide equity or debt to Ola, which has raised about US$1.3 billion in funding and is valued at more than US$5 billion.
Softbank Capital, Ola’s key investor, faces its own financial issues and is selling assets to raise cash and reduce debt, which might pose another fundraising challenge for Ola, which was aiming to raise another US$1 billion this year.
Ola did not respond to an e-mail request for comment.
Didi said in an e-mail that it will focus in the coming months on “ensuring smooth integration internally.”
It did not comment on its meeting with Ola.
Didi has no immediate overseas investment plans, a person with direct knowledge of the matter said.
The stakes are high in India, already one of the world’s fastest-growing taxi markets. Ola and Uber have burned through investors’ money and clashed in legal battles over alleged dirty tricks tactics and pricing.
After the Didi deal, Uber is even more focused on India, which it has previously called its No. 2 priority overseas market, doubling down on resources, staffing and technology deployed there, said two people familiar with Uber’s plans, one of whom is based in the US.
Ola, founded by two graduates from India’s premier technology institute, commands half of the country’s taxi market as of the end of June in terms of the number of cars registered on its platform, according to Counterpoint Research, with Uber holding about 30 percent of the market and catching up fast.
Uber previously launched a bike taxi and autos service in India — a sign that it wants to localize transport options and a lesson from China, where it focused on privately-owned cars in big cities, where car ownership has historically been low.
In February, Uber opened an engineering center in Bengaluru, India, and has, according to LinkedIn Corp, brought in ex-Google executive Apurva Dalal to lead its India product build.
It has also hired more than three dozen engineers in India in six months and plans to add dozens more by the end of the year, one of the people familiar with Uber’s plans said.
While Uber has pushed into cities and markets worldwide, Ola operates only in its home market. Ola is in 102 Indian cities versus Uber’s 27, according to Counterpoint, and offers a wider range of products.
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