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Look Out Uber—China’s Didi Just Raised $4 Billion to Go Global in the Ride-Hailing Battle

December 21, 2017, 10:30 AM UTC

Didi Chuxing has scored another investment from SoftBank Group in a massive funding round that will bankroll the Chinese ride-hailing leader’s exploration of new markets and technologies.

Didi said it’s secured new financing of more than $4 billion. That pushed its valuation to about $56 billion and lifts cash reserves to $12 billion, people familiar with the matter said, asking to not be identified as the details are private. The five-year-old company now intends to expand internationally as well as develop self-driving and electric vehicle systems, it said in a statement.

Read: Uber in Talks With 4 Investors in Possible $12 Billion Deal

Didi, the world’s second-most valuable startup, dominates ride-hailing in China after pushing Uber Technologies out of the market. The Beijing-based company has started taking steps beyond the mainland, backing Estonian player Taxify OU while preparing a push into Taiwan via a franchising model. That expansion coincides with a difficult period for Uber, which is grappling with heightened regulatory scrutiny in Europe as well as mounting losses.

“The new round is pretty important for Didi. With the Chinese market very much stabilized, Didi has to go out to find new growth opportunities,” said Will Tao, an analyst with consultancy iResearch. “Its first steps in overseas expansion should be in Southeast Asian markets like Vietnam and Malaysia, because Uber has a strong presence in Europe and the U.S.”

The new funding comes after Didi raised more than $5.5 billion in April, a record round led by SoftBank (SFTBY) that was said to value the startup at $50 billion.

Matthew Nicholson, a spokesman for Tokyo-based SoftBank, confirmed the latest investment came from the company itself rather than the SoftBank Vision Fund spearheaded by Masayoshi Son. Abu Dhabi’s Mubadala also took part in the latest financing, the people familiar with the matter said.

Didi is already one of China’s most richly funded private companies: its backers range from the country’s sovereign wealth fund to e-commerce giant Alibaba Group Holding Ltd., WeChat-operator Tencent Holdings Ltd. and Apple Inc. But it needs the capital to expand its research into artificial intelligence and autonomous car technologies, areas in which the industry’s largest companies—including Uber and Alphabet (GOOGL)—are pouring resources.

All are vying for leadership in technology that will transform mobility, while also representing a massive opportunity to reduce costs. The Chinese firm’s advantage may be data on its 450 million-plus users scattered across some 400 cities. It opened an artificial intelligence lab in Mountain View, California this year that’s lured dozens of stalwarts in the field.

“The optimization of maps and route designs takes a great deal of effort from deep learning,” Tao said.

Didi’s expansion comes at a difficult time for Uber, whose founder Travis Kalanick was replaced by Dara Khosrowshahi after a series of scandals. Those ran the gamut from a leak of 57 million rider and driver records to revelations that the company spied on competitors. Uber, the world’s most valuable startup, lost $1.5 billion in the third quarter, up from $1.1 billion in the prior quarter.

“Didi plans to scale up investments in AI talent and technologies, to further build up its intelligent driving and smart transportation capabilities,” it said in the statement. The company said it also plans to build out its network for electric cars, such as charging stations.