Didi Taxi plans to hold an initial public offering in three to five years, preferably in the U.S., as the cab-booking application backed by Tencent Holdings Ltd. vies to become China’s largest provider of the service.
“We will definitely do an IPO,” Zhang Bo, Didi’s co- founder, said in an interview in Beijing. A U.S. listing “makes the most sense” given that the company is registered in the Cayman Islands, he said, without giving more specific details.
Didi competes for users with Kuaidi, a similar app backed by Alibaba Group Holding Ltd., by sending commuters’ taxi requests to cabs available in the vicinity based on their real- time locations. Didi, which plans to triple its booking orders to 15 million a day by year-end, will strengthen cooperation with Tencent as it sees the next six months to be a vital period for winning the largest market share, Zhang said.
“The battle between the two of us has entered the final round and only one will take the lion’s share,” Zhang said May 9. “The largest player will win greater support when it comes to raising capital and that will in turn help us attract a better team.”
Li Min, a spokesman at Kuaidi, didn’t immediately respond to a text message and call to his mobile phone seeking comment.
Didi, owned by Beijing Xiaoju Keji Didi Dache Co., plans to increase its workforce by 50 percent to about 1,500 people by the end of the year, hiring in areas including technology support and daily operations, said Zhang.
The company is targeting to make its service available in 600 cities by the end of this year, from 170 at present, Zhang said. Didi, set up in June 2012, currently has 100 million passenger accounts and 1 million registered taxi drivers, said the executive, who is also its head of technology.
It takes 26 seconds on average for a Didi user to find a taxi, according to company data. Passengers have the option of paying through Tencent’s third-party system Weixin Payment. Both commuters and drivers can earn cash rebates by using this system, with taxis in Beijing, for instance, earning 5 yuan ($0.80) a trip for as many as 10 routes a day.
Kuaidi, owned by Hangzhou Kuaidi Technology Co., operates in a similar way and allows payments and rebates through Alibaba’s mobile-payment system, Alipay Wallet.
Both apps don’t take a cut of cab fares and it is unclear when they will begin generating earnings. While Didi has introduced some advertisements, it’s focused on providing the best experience to retain users and isn’t in a hurry to generate revenue, Zhang said.
Tencent, Asia’s largest Internet company, works closely with Didi by providing technology support and links to its other services. WeChat, known as Weixin in China, and QQ, Tencent’s instant-messaging services, provide links for users to download the Didi app to their phones.
In February, Didi began offering its users virtual rewards such as airplanes and weapons for some of Tencent’s mobile games when they make a certain number of cab bookings, said Zhang.
Didi also is working with Tencent-backed Dianping.com, which provides reviews and discounts on food and entertainment similar to Yelp and Groupon. Dianping already allows its users to download Didi’s service on its app, and users searching for a restaurant or hotel are provided with a link to book a taxi to that destination, Zhang said.
Didi plans to continue operating independently after the IPO and doesn’t want to be acquired, said Zhang.
Its ultimate goal is to change the way people commute by providing the best user experience. Over time, Didi will include more information relevant to improving users’ travel within China, such as bus timings for planning efficient routes, and information on restaurant discounts based on their destinations, Zhang said.
“An IPO is a way for us to win more ammunition to support our bigger dream,” he said.