Valued at $56 billion, sources say Didi aims to spin-off its car services business before its potential blockbuster IPO.
On Monday, China’s biggest ride-hailing service Didi Chuxing Technology stated it will invest $1 billion in its auto services business as part of a re-branding exercise ahead of its anticipated initial public offering (IPO).
Didi also stated, its services business which includes car maintenance, auto leasing, and gas station services, has gross merchandise value (GMV) sales of $8.79 billion (60 billion yuan).
“Building on our service to 30 million Didi drivers, we will strive to develop a leading one-stop auto solutions platform capable of winning the highest trust of car users,” said Kevin Chen, who heads Xiaoju.
The developments comes ahead of Didi’s widely anticipated blockbuster IPO which could happen as soon as early 2019, said sources familiar with the plans.
Valued at $56 billion in its last funding round in 2017, its IPO is expected to be one of the biggest in recent years.
According to sources, Didi’s car services business is worth around $2 billion-$3 billion, and that it plans on spinning this off from its core business before a its potential IPO.
Although Didi started offering its auto services in 2015, it launched its platform that unified the services only in April 2018.
Didi expects Xiaoju’s annualized turnover to exceed $13.17 billion (90 billion yuan) by the end of 2018; it currently operates in 257 cities with around 7,500 partners and distributors.
The ride-hailing firm has also invested heavily in expanding its core business outside its home market. With Uber retreating from China in 2016, Didi has expanded its network in Brazil, Southeast Asia, Australia and Mexico by either investing in local partners or launching their services.
In July 2018, Didi stated it had received a $500 million investment offer from Booking Holdings Inc, a U.S. travel firm as part of a strategic partnership.