Alibaba denies the rumor that it has lent RMB 60 million to Ofo | Digital Asia
Digital Asia News Update
Rumors started Tuesday morning that China’s tech giant Alibaba has lent bike sharing company ofo RMB 60 million to help them pull through a cash crunch. Later at noon, local media reported both Alibaba and ofo denied the rumor.
On September 5, local media reported an unconfirmed “millions of dollars” worth of fundraising for the yellow bike-rental company led by Ant Financial and followed by Didi Chuxing. Didi and Ant Financial declined to comment while ofo said it was unclear on the issue.
The rumors show further speculations of the company’s operations and reveal continued doubt about how the company would fulfill its ambition to stand alone.
As bike rentals cool, ofo chooses to stand alone
Word has been circulating for a while that ofo was to be acquired by Didi, with decreasing valuation each time. However, Yu Xin, co-founder, has denied the rumors several times. Amid acquisition rumors, the bike-rental company based in Beijing has withdrawn from several overseas markets, including South Korea and Australia.
Ofo’s most recent confirmed financing happened on March 13 when they raised $866 million from Alibaba, Haofeng Group, Tianhe Capital, Ant Financial, and Junli Capital. In February, data from the National Enterprise Credit Information System showed that they pledged more than four million bikes in exchange of two loans totaled RMB 1.77 billion from Alibaba affiliates.
Earlier this year, the company was said to be delaying payments to bike manufacturers and logistics companies. The total payments were worth more than hundreds of millions of RMB. Shanghai Phoenix, a domestic bike manufacturer, has sued Dongxia Datong, a child company in charge of operating the bikes, for delaying payments.
Ofo’s overseas operations show signs of cash crunch
The bike-rental company has been trying to explore methods of commercialization and improve efficiency this year, including increasing ads on bikes and inserting advertisements when a user unlocks a bike. However, these methods haven’t seemed to relieve ofo from its stressed financial situation.