Logo of Didi Chuxing is seen at its headquarters building in Beijing, China. Photo: Reuters/Kim Kyung-Hoon

China’s ride-hailing giant Didi Chuxing is planning to raise 10 billion yuan (US$1.58 billion) in financing by issuing asset-backed securities via its Tianjin-based tech subsidiary, Yicai.com reported.

Although Didi has not given any explanation for the planned use of the new funds, the prevailing view in the industry is that the financing is related to its upcoming takeaway business.

Didi hopes to raise cash without diluting equity, which will help to supplement liquidity in response to the ongoing “money-burning war,” an insider said.

While Didi is expanding its business line to food delivery, another major takeaway company, Meituan.com, is setting its foot in the ride-hailing sector. Both firms are expected to burn cash to secure greater market share.

Meanwhile, Didi has been recruiting delivery men for its takeaway business in Wuxi city with lucrative packages. They only need to be on-call for more than 48 hours per week to get a monthly income of 10,000 yuan (US$1,577.9 dollars), compared to Meituan’s salary package of 6,000 yuan in Beijing.

On the other hand, the company has raised more than US$1 billion in investment for its upcoming ride-hailing business. Wang Xing, the founder and CEO of the firm, said the ride-hailing business is a must for Meituan’s future.