Didi said to weigh raising billions in fresh capital

Didi Chuxing, the ride-hailing service that acquired Uber Technologies Inc.’s China business last year, has held informal talks with investors about raising billions of dollars to buy more time to build a profitable business model, according to people familiar with the matter.

Didi’s investors, numbering more than 100, are divided over whether more capital is needed now, said the people, asking not to be named because the matter is private. Fundraising advocates argue more cash will help Didi develop autonomous driving technology and create a lucrative platform for services amid tighter ride-hailing regulations. Skeptics contend the firm has enough cash given the USD10 billion it had amassed last year and that raising more equity will only dilute existing shareholders, the people said. Didi, with backing from Apple Inc. and Tencent Holdings Ltd., hasn’t notified some investors because it hasn’t decided whether to proceed, the people said.

Some investors have approached Didi about investing more capital, rather than the company taking the initiative, one of the people said. If it goes ahead with a deal, Didi is likely to seek at least $3 billion and is discussing whether it can hike its valuation, now $34 billion, another person said. Didi may ultimately decide not to proceed with the fundraising, the people said.