(Yicai Global) July 17 -- Didi Chuxing will spin off its automobile service platform to prepare for its initial public offering. The company plans to raise USD1 billion to USD1.5 billion on top of its current valuation of USD3 billion, with SoftBank one potential investor.

The scheme has not yet been finalized, business news media Caijing reported.

Didi Chuxing decided to set up its auto service platform on April 16. After integrating staff from various departments including the former automotive aftermarket (Xiaoju Car Service), transport capacity center, Hailang car rental business, and Uber, the new platform encompasses refueling, maintenance, Didi's open car platform, and time-share rental services.

The annual transaction volume of Didi's auto service platform exceeds CNY37 billion (USD5.5 billion), and spans over 200 cities with more than 50,000 partners and distributors. It set its annual transaction volume goal for this year at CNY90 billion.

Didi's automobile service is its second most-promising business following its mainstay ride-sharing platform.

Brand segmentation explains the scheme to set Didi automobile services on its own two feet, however, a Didi staffer told Caijing.  

Didi's move to detach its car services is a precondition for its IPO plan. Two considerations usually prompt companies to resort to a split-off, a senior executive in a listed investment and financing firm told Caijing.

First, they generally slough off businesses that lack profitability or operate at a loss, but list all their quality lines. Second, such a move helps clarify major businesses and lop off those less related to them, which facilitates valuation and also panders to investor preference for companies with more focused businesses.

Editor: Ben Armour