Alibaba Reportedly Bails Out Ofo With USD8.8 Million Loan

Alibaba Reportedly Bails Out Ofo With USD8.8 Million Loan

Xu Wei

Date: Tue, 09/11/2018 - 19:26 / source:Yicai
Alibaba Reportedly Bails Out Ofo With USD8.8 Million Loan
Alibaba Reportedly Bails Out Ofo With USD8.8 Million Loan

(Yicai Global) Sept. 11 -- Jack Ma’s Alibaba Group Holding has reportedly lent CNY60 million (USD8.8 million) to struggling bike sharer Ofo, which is looking to steer back on track after racking up a mountain of debts.

Ofo, officially Beijing Bikelock Technology, has already received the money, Jiemian News reported today, citing an informed source. The loan would be the second from tech titan Alibaba this year after it lent the bike sharer nearly CNY1.8 billion (USD260 million) in March.

QQ Tech, owned by Alibaba rival Tencent Holdings, has since reported that both Alibaba and Ofo deny the loan’s existence.

Tensions have been running high at Ofo for quite some time. Its largest investor, ride-hailing provider Didi Chuxing, proposed a merger with Ofo rival Mobike earlier this year that left no space for Ofo’s Chief Executive Dai Wei. The CEO then turned to Alibaba for a massive cash injection, and the e-commerce behemoth was happy to oblige and pick up a 12 percent stake in the firm.

Ofo is also reportedly looking to raise billions of dollars in a new fundraising series with Alibaba’s fintech affiliate Ant Financial and Didi leading the round. However, neither of the supposed investors has confirmed whether or not this is true.

Both are looking to acquire Ofo exclusively, according to Sun Naiyue, an analyst at Analysys. Ant wants last-kilometer data to connect with its existing information on user destinations, while Didi is angling to enhance its comprehensive range of transport services, he added.

Each of the companies has been reported to be taking over the company, but Ofo has denied the speculation and is adamant it will remain an independent company. The latest report came from National Business Daily, which said on Sept. 2 that Didi would pick up Ofo in the fourth quarter at a price lower than previously reported.

A late July report from tech news outlet 36Kr suggested that Didi was willing to pay about USD1.5 billion for Ofo, about half of what on-demand services provider Meituan paid for Mobike in April and a chunk less than Dai was hoping for.

If a deal cannot be reached between the three, it could spell the end for Ofo, according to Jiemian.

Credit Crunch

Ofo is also struggling to fight off its creditors. Bike maker Shanghai Phoenix Enterprise filed a lawsuit against the company in Beijing on Aug. 31, claiming it is owed almost CNY68.2 million (USD10 million), according to purchase contracts signed last year. It was reported last December that the debtor had just CNY350 million in cash reserves.

The company has also aggravated its logistics services provider Yunniao Technology, which visited Ofo's offices twice recently to urge a payment settlement, according to an Ofo insider. 

Editor: James Boynton

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Keywords: OFO, Didi, Alibaba, Bike Sharing