Alibaba, Jack Ma’s e-commerce conglomerate, has injected RMB 1.77 billion (approx. USD 280 million) in the country’s major bike-sharing startup Ofo through two subsidiaries, according to a report by Chinese media The Paper.
On February 5, Ofo pledged 4.45 million bikes to Shanghai Yunxin Venture Capital, a unit of Alibaba’s financial arm Ant Financial, as collateral in exchange for RMB 500 million (USD 80 million). A week later, the bike-sharing company mortgaged again a certain amount of bikes to Alibaba subsidiary Zhejiang Tmall Network for RMB 1.27 billion (USD 200 million), public records show.
Ofo was rumored to be on the verge of going out of business for running low on cash and was in urgent need of a fresh capital injection. We reported earlier that the Beijing-based bike sharing service was struggling to complete its latest USD 1 billion round led by Alibaba, as one of its investors Didi Chuxing declined to sign the investment agreement.
Ofo might be using the funding to dilute some of Didi’s stake, people familiar with the matter said. And that’s the very reason led to Didi’s reluctance to greenlight Ofo’s new funding.
Alibaba’s 280 million through bike mortgages came as a lifesaver for Ofo.
Rumor has it that Mobike and Ofo were earlier in talks for a merger to create the world’s largest bike-sharing company, but both Mobike and Ofo have denied the potential merger later.
As of 2017, Ofo operates over 10 million bikes in 250 cities and 20 countries, serving 62.7 million monthly active users, according to the company. It has locked horns with Mobike, a Beijing-based rival founded in 2015 by CHENG Weiei, to win a dominant place in the booming industry.
Mobike now operates in over 170 cities across the world including SE Asian countries such as Singapore, Thailand and Malaysia. Last month, the company was said to raise USD 1 billion in a Series E round led by Tencent-backed Meituan-Dianping, the world’s largest O2O platform.
The competition in Chinese bike-sharing space escalates as giant-backed emerging players keep beefing up their presence. Alibaba has pumped money into the bike-sharing startup Hellobike as an alternative to Ofo through its financial arm Ant Financial in last December. Didi, on the one hand was curbing Ofo funding round; on the other hand has incorporated a bike-sharing platform into its ride-hailing app in a way to tap into the market.