Didi Chuxing, the Chinese car-booking group, said on Wednesday that it has acquired 99, the Brazilian app, potentially providing more firepower for a rival to Uber in one of the world’s largest markets.
Beijing-based Didi already owned a minority stake in 99 and the takeover pushes it further beyond its national borders, just weeks after it raised $4bn in new capital to fuel expansion.
A local start-up, 99 has amassed 14m users and 300,000 drivers in Brazil, which, with over 200m inhabitants, is one of the most competitive markets for car-booking apps. Uber has 17m users and 500,000 drivers there, making the country its second largest outside the US.
“We are confident that being part of Didi Chuxing will vastly enhance our capability to expand our services throughout Brazil to bring critical value to users, drivers and cities,” said Peter Fernandez, chief executive of 99.
The ride-sharing industry is experiencing consolidation because scale is vital to attracting both drivers and passengers, and deals can help stabilise a business model that is often seen as overly-dependent on fluctuating prices and cash-burning promotions.
While many localised car-hailing apps have emerged in individual countries, global operators such as Didi and Uber see network effects as their customers travel around the world. Being able to use the same app in multiple countries is more convenient than downloading extra software and signing up for a new account in local currencies.
“Globalisation is a top strategic priority for Didi,” Cheng Wei, founder and chief executive of Didi, said in a statement. “The success that founders and team of 99 have achieved in Brazil embody the very spirit of entrepreneurship and innovation in the LatAm region.”
Terms were not disclosed for this latest ride-sharing land grab but Brazilian newspaper Valor Econ?mico reported that Didi’s takeover valued 99 at $1bn.
Launched in 2012, 99 provides on-demand peer-to-peer and traditional taxi services in over 400 cities in Brazil. It was the first service in Brazil to launch a female-only option for female passengers, as well as the first to offer tipping for its drivers.
Its $200m fundraising last year was the largest investment on record in a Brazilian start-up. The round was led by Didi and Riverwood Capital, a private equity firm with offices in Silicon Valley and S?o Paulo.
The takeover further complicates Didi's relationship with Uber. The San Francisco-based ride-hailing pioneer is a significant investor in Didi following a 2016 deal that turned the former rivals into partners in the Chinese market. With Didi taking control of 99, Uber once again finds itself competing against its sometime partner in one of its fast-growing markets.
In another example of overlapping interests in the sector, all three companies have received significant investments from SoftBank of Japan in the past year.