A resident uses the app of Chinese bike-sharing service ofo on his smartphone to rent a bicycle on the street in Shanghai. Photo: AFP

Chinese bike-sharing startup Ofo has raised US$866 million in a new round of financing led by Alibaba, Yicai.com.

The last cash injection the company received was in July last year, while the longest gap in its previous financing was three to four months.

The investment has put all speculation on pause— it was suggested Ofo could merge with Mobike, another major bike-sharing start-up which is backed by Tencent.

Dai Wei, the founder and CEO of Ofo, emphasized that they will develop independently with the support of many investors.

The sharing-bike business relies on a heavy asset operating model, which means major market players have little ambition to merge, as the assets tend to be heavy burdens.

Meanwhile, the traffic and capital behind Ofo and Mobike are on equal footing. The merger could even create a new deadlock, the report said.

This round of funding has also seen the adoption of parallel financing involving equity plus debt. Accordingly, Alibaba has joined the board of the company, which could push other shareholders such as Didi Chuxing to make concessions over control.