Uber’s investment in Chinese ride-hailing company Didi has outlived its usefulness. Didi’s share price may have jumped nearly 50 per cent this month following reports that a Chinese government probe is coming to an end. But Uber is right to continue with plans to sell down its stake.
In 2016 Uber sold its Chinese operations to Didi in return for an 18.8 per cent stake — a deal valued at about $7bn at the time. Swapping lossmaking investments in competitive markets for a stake in dominant local businesses has enabled Uber to keep a foot in overseas countries. Instead of racking up losses in Indian food delivery, for example, it has invested in rival Zomato.
But the investment in Didi has done little to help Uber break even. After listing in New York last year, Didi was walloped with a Beijing cyber security probe that left it unable to add users. That knocked the share price down 90 per cent. Uber was forced to write down its investment. It is now valued at $1.4bn.