Didi Chuxing, China’s Rival to Uber, Scores $7 Billion in New Funding

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A driver shows a picture of Chinese car-service app Didi Chuxing on his smartphone in his car in Shanghai. Photo: Imaginechina

HONG KONG—China’s homegrown competitor to Uber Technologies Inc. has raised $7.3 billion in its latest fundraising effort, giving it a host of powerful allies including Apple Inc. AAPL 0.19 % to fend off the global ride-hailing champion locally.

Didi Chuxing Technology Co., the country’s biggest ride-sharing company, said Thursday that it closed a $4.5 billion fundraising round that attracted new investors such as Apple, China Life Insurance Co. LFC -0.31 % and the financial affiliate of online shopping firm Alibaba Group Holding Ltd. BABA -0.25 % The round valued the company at nearly $28 billion, people familiar with the matter said.

In addition, Didi said it has secured a $2.5 billion syndicated loan arranged by China Merchants Bank Co. CIHKY -0.23 % Didi also raised roughly $300 million in debt from China Life, the country’s biggest insurer.

The fundraising will leave Didi flush with cash to help it battle Uber in China’s competitive ride-hailing market. Didi said it now has about $10.5 billion in disposable funds following the new fundraising round through equity and debt.

Uber and Didi are duking it out for China’s potentially lucrative ride-sharing market by spending huge sums to attract drivers and passengers to their competing services.

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The battle between Uber and Didi for global investment allies has only intensified in recent months. Uber raised $3.5 billion from the investment arm of Saudi Arabia earlier this month as part of a financing round totaling more than $5 billion, the largest to date raised by a private, venture-backed company.

Uber is separately turning to the so-called leveraged-loan market for the first time to raise as much as $2 billion, The Wall Street Journal reported this week.

Uber has hired Morgan Stanley MS 0.09 % and Barclays BCS 0.06 % PLC to sell a leveraged loan of $1 billion to $2 billion to institutional investors in the coming weeks, according to people familiar with the matter.

While Uber’s business in China has expanded rapidly during the past year, the company still faces an uphill battle against Didi, which not only has a larger share of the private car-hailing market where Uber competes, but also dominates the country’s taxi-hailing segment.

Didi, which was formed last year by the merger of two rival Chinese taxi-hailing apps, is backed by influential domestic and foreign investors. Its growing list of investors includes two of China’s biggest internet companies—e-commerce company Alibaba and social-network company Tencent Holdings Ltd. TCEHY -0.25 % , as well as Apple. Didi said Tencent and Alibaba both put additional money into the latest fundraising round, without disclosing the exact amount.

Other big investors in the round included several Chinese banks and insurance companies that made investments of more than $100 million each, according to a person familiar with the matter.

As the two biggest ride-hailing companies scour the globe for capital, a few of the same investors are putting money into both companies.

China Life, the state-owned insurer that this month invested in Didi, had already invested in San Francisco-based Uber last year. Hillhouse Capital Group, a China-based investment firm, was an early investor in Didi but also led a convertible-bond deal to invest in Uber’s global operations. Similarly, Tiger Global Management LLC has backed Didi in China and has invested in Uber’s global operations.

Competing startups dislike overlapping shareholder bases because the companies often share confidential strategy and financial results with investors. It’s unclear whether Didi and Uber have made any special arrangements for those investors.

Boutique investment bank China Renaissance, which specializes in technology deals, advised Didi on the fundraising.

Write to Juro Osawa at juro.osawa@wsj.com and Rick Carew at rick.carew@wsj.com