Ofo investor Allen Zhu Xiaohu of GSR Ventures has reportedly exited Ofo with the sale of his shares to Chinese technology major Alibaba Group for $3 billion in a transaction that values Ofo at $10 billion.
In an account by TechNode, which credited Zhu’s brother-in-law Ou Chengxiao as its source, financial terms of the deal suggest that the valuation of Ofo has surged threefold in a six-month period; Ofo’s Series E financing round in July 2017, which was led by Alibaba, saw Ofo valued at an estimated $3 billion.
To date, no public comments have been issued on this alleged transaction.
Zhu is an early investor of Ofo and stated in September 2017 that only the merger of Mobike and Ofo would allow the bike sharing operators to reach profitability.
This was translated as a statement that investors were pushing for a merger of the two firms, though this has been denied by both companies. Zhu later said in December 2017 that such a consolidation in the sector was unlikely.
Chinese transport services major Didi Chuxing, which has also invested in Ofo, was reportedly driving such a merger forward. However, with its partnership with Ofo reportedly facing friction, the world’s largest ride-hailing firm has charted out an independent path in bike-sharing by launching its own operations. It acquired Bluegogo, once the third-largest bike-sharing firm in China that had to wind up operations late last year, and will now offer users access to both car and bike-hailing options on its app.
The maturation of China’s bike-sharing services market is likely to mirror the developments of its transport network firms, which saw significant competition and the merger of Uber China’s operations with Didi Chuxing.
While China’s bike-sharing operators have been able to sustain their operations so far, sacrificing profitability to accelerate their growth as they expanded into the US and Europe – backed by the likes of Alibaba and Tencent – concerns remain regarding the sustainability and fit of their business models.