An investment from China’s sovereign wealth fund to Didi Kuaidi bodes well for ridesharing in China

You see a a traffic jam. The Chinese government sees dollar signs.
You see a a traffic jam. The Chinese government sees dollar signs.
Image: Reuters/David Gray
We may earn a commission from links on this page.

Ridesharing’s legal future in China remains just as uncertain now as it was two years ago. For every government endorsement of Uber-like services, there’s another statement from officials that hints at a crackdown. But reports of a new investor serves as the best indicator yet that the industry has at least partial support from the government.

Reuters and the WSJ have both reported that China Investment Corporation (CIC), the nation’s sovereign wealth fund, contributed to the recently closed $2 billion round for Didi Kuaidi. The latter is China’s answer to Uber though unlike Uber it uses licensed taxi drivers in addition to regular drivers. The round officially closed last month and raised the startup’s valuation to $3.5 billion.

Unlike Didi Kuaidi’s most high-profile investors to date—Alibaba, Tencent, and Ping An Insurance Group—CIC is a state-owned company that gets its capital from the nation’s foreign exchange reserves. It’s split into three subsidiaries: Central Hujin, which invests in state-owned enterprises; CIC International, which invests abroad; and CIC Capital, which works with domestic companies looking for overseas capital. As of December 2014, the organization had $23 billion in cash and $746 billion in assets.

The alleged investment clocks in at around $500 million (link in Chinese), if domestic Chinese media is to be trusted. But size is less important than context.

CIC tends to steer clear of internet-related companies and focus instead on industries like mining and real estate. For example it invested $1.7 billion in Canadian mining firm Teck Resources in 2009, and then an additional $1.9 billion in other Canadian resources companies. It also owns property in Australia, Japan, and (providing a bid receives approval) France.

But CIC’s most telling investment might be its most mundane: water. The firm once owned a stake in Singapore water treatment company SIIC, before selling it for $74 million. It currently owns an 8% stake in Thames Water, the largest water supplier in the UK.

Uber CEO Travis Kalanick once said he hopes to make transportation “as reliable as running water.” He might be on to something.