Leading ride-hailing company Uber Technologies Inc. is seeking to sell part of its $6.3 billion stake in Didi Chuxing, Bloomberg reported.
Uber is beginning to sell some of its investment projects to increase its stock price. The closing price of Uber was $36.41 as of Sept. 17, far lower than the issue price of S$45 at the time of its IPO in May 2019.
Dara Khosrowshahi, Uber CEO, is said to be discussing the sale with Didi Chuxing and SofeBank Group Corp., who is a joint shareholder of Uber and Didi. Among all the options on the table, one possibility is for SoftBank to join hands with other investors to acquire a minority of Uber’s 15% stake, according to Bloomberg.
In August 2016, Didi Chuxing announced to have reached a strategic agreement with Uber and would acquire Uber’s business in China. After the transaction is finalized, Didi Chuxing and Uber held equity of each other and became minority shareholders of each other.
Uber’s financial report for the second quarter of 2020 released in August showed that the company’s second-quarter revenue was $2.241 billion, witnessing a year-on-year decrease of 29%.
The ride-hailing business was hit hard in the quarter mainly due to the pandemic with the revenue decreased 67% year-on-year to $790 million. The revenue from food delivery sector grew 103% year-on-year to $1.211 billion while the freight business increased 27% compared to the same period last year to $211 million.
“Uber’s reported plan to sell a minority stake in Didi, and its proposal for a similar approach to Yandex, may help offset cash burn that’s compounded by a shift in bookings mix toward food delivery,” said Mandeep Singh, a senior analyst from Bloomberg Intelligence.
The Beijing-based Didi Chuxing has expanded its foreign market this year. The ride-hailling giant announced its expansion into Russia in August.
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In Uber’s 2019 annual report, Uber claimed to be competing with Didi in Latin American as well as the Australian market.
Both Uber and Didi Chuxing declined to comment on the matter.