(Bloomberg) -- Truck Alliance Inc., an Uber-type service for trucks in China known as Huochebang, is near an agreement to raise about $156 million, people familiar with the matter said.
The investment will be led by Baidu Capital, the investment arm of China’s largest search engine, and could be announced as soon as this week, said the people, who asked not to be identified because the matter is private. The infusion comes on the heels of a $115 million fundraising in December, which pushed Huochebang’s valuation to about $1 billion. The investments are both part of the startup’s B round of funding and it is close to raising a third tranche, the people said.
Huochebang, also backed by internet giant Tencent Holdings Ltd. and Hong Kong’s All-Stars Investment Ltd., is competing with 200 services to revamp the country’s inefficient long-haul trucking system. More than 80 percent of goods are still ferried by road, accounting for the bulk of China’s $1.6 trillion logistics sector, Deloitte has estimated.
A representative for Huochebang declined to comment. Representatives for Baidu Capital didn’t respond to a request for comment during non-working hours.
The deal comes amid a surge in the China venture capital market. The value of investments in greater China reached a record $49.1 billion last year, according to research firm Preqin, and Uber rival Didi Chuxing said on Friday it had closed a $5.5 billion fundraising, the largest venture investment on record.
Despite the country’s reliance on trucking, China’s trucks stand empty for about 40 percent of the time, according to a report by the Industrial Securities Co. The inefficiency is partly due to the fact that 90 percent of trucks are owned by individuals, the report said. Guiyang-based Huochebang works with 2.6 million trucks, and an average $120 million worth of delivery transactions are conducted through its platform daily, the company said in March. The company brokers deliveries of everything from seeds and farming tools to bulkier items such as cement and coal.
Unlike Uber, which takes a cut from every ride, Huochebang makes money primarily from selling toll cards, taking a cut from the card top-ups, and helping truckers with financing. It’s building up service centers to provide backup support for drivers, with about 1,000 such operations spread across China as of March.
Baidu Capital manages 20 billion yuan ($2.9 billion) of funds and has invested into Nio, the electric car startup formerly known as NextEV Inc. Baidu is leveraging its search and mapping data to develop artificial intelligence used in driverless technology. It formed a self-driving car team in Silicon Valley last year, partnering with chipmaker Nvidia Corp. to test autonomous vehicles in China and California.
Jennifer Li, chief financial officer of Baidu Inc., is taking over as head of the investment business.
Huochebang’s largest competitor Yunmanman has said it is also in the process of raising funds, and already counts Sequoia Capital, Yunfeng Capital and Wang Gang -- Didi Chuxing’s angel investor -- among its backers.