Trump Adviser Takes Stake in China Ride-Sharing Company
A hedge fund billionaire who was an economic adviser to President-elect Donald J. Trump during the campaign has taken a position in a fast-growing Chinese ride-sharing company that recently signed a deal to acquire Uber Technologies’ operations in China.
John Paulson, who made $15 billion betting against the housing market before the financial crisis, told his investors on Wednesday that at least one of his portfolios had taken an investment stake in Didi Chuxing, a privately owned Chinese company, said people briefed on the matter who were not authorized to speak publicly.
The investment, by Mr. Paulson’s Advantage funds, is roughly 7 percent of the assets of those portfolios, he told investors, these people said.
Didi Chuxing, which has backing from Alibaba Group and Apple, could prepare for an initial public offering in the next year, according to news reports. In August, Didi struck a deal with its main rival, the American ride-hailing giant Uber, to acquire Uber China in a transaction that created a company some valued at $35 billion.
Mr. Paulson disclosed the investment in Didi at a meeting with investors on Wednesday in New York during which he apologized for the overall poor performance of his $1.2 billion Advantage funds. His Paulson Advantage fund is down about 22 percent this year, and a leveraged version called Paulson Advantage Plus is down about 26 percent.
In making the investment, Mr. Paulson is joining several prominent hedge funds and investment firms including two so-called Tiger Cubs — a nickname for firms founded by protégés of hedge fund manager Julian Robertson and his Tiger Management. One of those firms, Coatue Management, founded by Philippe Laffont, made a $2 billion investment in July 2015, according to the private equity data site CrunchBase. Chase Coleman’s Tiger Global has also backed the Chinese company, as has Daniel Loeb’s Third Point.
“We expect Didi to grow into one of China’s largest internet companies, resulting in significant equity appreciation over the next five years,” Mr. Loeb recently told investors in a letter.