Soon-to-go-public Chinese car rental agency eHi buys $25M stake in top taxi hailing app Kuaidi Dache

An updated prospectus from Chinese online car rental agency eHi shows the company in April bought an 8.4 percent stake in taxi hailing app Kuaidi Dache for US$25 million (h/t to TechNode). eHi also has a warrant to purchase an additional 4.7 million shares of Kuaidi in its next series C funding round.

The prospectus cites the acquisition as part of eHi’s growth strategy:

Our growth strategy may involve the acquisition of businesses and/or entities, or entering into strategic partnerships or alliances in areas in which we do not currently operate or have sufficient capacity to operate. For example, we made a strategic investment in Travice Inc., which develops and operates the Kuaidi mobile taxi and car calling service provider in April 2014.

Shanghai-based eHi earlier this month filed for a US initial public offering that could raise up to US$200 million. The company has yet to turn a profit, but the prospectus shows sales rose 26 percent in 2013 to over $91.3 million. Ctrip, China’s biggest travel booking website, led a US$100 million funding round into the company at the end of last year and US$13 million more this year, raising its stake in the company to 23 percent.

Another of Kuaidi’s big-name backers is ecommerce titan Alibaba, which invested in the startup during its seed round.

Kuaidi Dache is one of China’s leading taxi hailing apps, booking five million rides a day as of April this year. But it’s burned through an immense amount of cash to stay competitive against the Tencent-backed Didi Dache.

See: China’s car services startups get a funding boost that will drive them off a cliff