Funding for UCAR shows investors' confidence in sector's outlook: analysts
UCAR Group, a Chinese car-hailing app company, has secured $550 million in financing, according to a statement from CAR Inc, one of UCAR's major shareholders.
The transaction demonstrates the confidence that investors have in the company's future and the Chinese market, experts said.
A group of investors, including Tourmaline Gem, CAR Inc, Harmony and Haode Investment, purchased a total of about 4.9 million Series B preferred shares that UCAR issued, worth about $550 million in total, the statement said Thursday.
This is the second round of fundraising for UCAR, which was listed on the Hong Kong Stock Exchange last fall. In the first round, which closed in early July, the company raised a total of $250 million, media reports said.
Experts said that the amount of money raised shows that investors have great confidence in the future of UCAR's business model, even though the company lost money last year.
UCAR lost about 38 million yuan ($5.96 million) last year, according to the company's financial statement at the end of 2014.
"Although UCAR has only been operating for a relatively short period, its business-to-customer (B2C) business model does offer a great advantage," Zhang Xu, an analyst with Analysys International, told the Global Times Thursday. "UCAR is the leader in that area," he said.
Other car-hailing apps such as Uber and Didi Kuaidi, which focus on connecting private car owners with riders, follow the customer-to-customer (C2C) model. But UCAR uses a B2C model under which it serves commuters with its own drivers and cars, which are primarily from Car Inc, a leading Chinese car rental firm.
Zhang said that, while the C2C model has been developing fairly well, the B2C model still needs further exploration and the new financing will help UCAR to do just that.
Hu Dan, senior consulting manager at consultancy iResearch Consulting Group, agreed that this round of fundraising represented further recognition of UCAR's business model.
"In the early stages, some doubted that UCAR's model could grow to a great scale, but this shows it does have a great future," Hu told the Global Times Thursday.
Meanwhile, Didi Kuaidi has invested $100 million in US-based ride-sharing company Lyft, Ye Yun, PR director at Didi, told the Global Times Thursday.
Through the partnership, the companies will share technology, local experience, business resources, their user bases and driver networks to provide high-quality service to users who travel between China and the US, Didi and Lyft said in a joint statement.
Didi, after dominating the Chinese market for some time, is looking to expand internationally, said Hu.
Choosing to work with Lyft is the best and only option for Didi, because Lyft is competing with Uber in the US while Didi is facing competition from Uber in China, Hu added.
A PR representative from Uber said that it is a "good thing" that Didi invested in the US, but the ultimate competitive advantage lies in innovation of the business model and technology.
A report issued by Analysys International on Monday said the revenue of the car-hailing industry in 2015 will reach 26.07 billion yuan, and that figure will double by 2018.
