The Uber of China is reportedly worth $28 billion

Didi Chuxing has raised $4.5 billion in a round of funding that values it at close to $28 billion, according to people familiar with the situation, giving China’s leading ride-sharing company more firepower to battle Uber Technologies Inc.

Didi’s newly earned valuation would make it the world’s third-largest privately backed young company, surpassing Airbnb Inc. Didi was valued at $16.5 billion last year. It closed its latest round of funding with the help of Apple Inc. and prominent Chinese investors, including the nation’s top life insurer, according to the people, who didn’t want to be identified because the deal is private.

The Beijing-based company also snagged a $2.5 billion debt package from China Merchants Bank Co. on top of the fundraising, the Wall Street Journal reported earlier, citing a person familiar with the matter. Didi declined to comment via e-mail Wednesday.

Didi, which has formed a global coalition with Lyft Inc. in the U.S., India’s Ola and Southeast Asia’s Grab, is trying to fend off an aggressive charge by Uber onto its home turf. Both companies are amassing cash and spending aggressively to expand in the world’s second-largest economy, partly by subsidizing the costs of rides.

Backed by Alibaba Group Holding Ltd. and Tencent Holdings Ltd. — China’s two most valuable technology companies — Didi is targeting an initial public offeringin New York next year, people familiar with the matter have said. The timing depends on how the tussle with Uber plays out, the people said.

Uber is spending at least $1 billion a year in China and has raised capital there that, as of January, valued the Chinese operations at $7 billion. It recently raised $3.5 billion from Saudi Arabia’s sovereign wealth fund — the single biggest investment in the company to date. That capital infusion brought the total of Uber’s latest financing round to $5 billion. San Francisco-based Uber, valued at almost $68 billion, is the most valuable closely held company. Xiaomi Corp., at $46 billion, is No. 2, according to data from research firm CB Insights.