Exclusive-Didi In Talks To Buy A Third Of China EV Maker Sinomach-sources

China's Didi is in talks with state-backed Sinomach Automobile to buy a third of its electric-vehicle unit, two sources said, signalling the ride-hailer's regulatory troubles are in the rear view mirror as it focuses on growth.

The deal, if completed, would be a strategic shift for Didi Global Inc into the world's largest EV market and underscore how regulators are easing up on the company.

Scrutiny from Beijing has forced Didi to pursue a delisting from New York and rein in its business but there are signs of a thaw. The Wall Street Journal reported on Monday that regulators are set to conclude their investigations into the company.

Didi aims to acquire shares in small-sized automaker Sinomach Zhijun Automobile from minority shareholders and inject new capital into the firm, one of the sources told Reuters. A stake of that proportion would cost Didi more than 1 billion yuan ($150 million), said the other source.

The talks for a stake in Sinomach Zhijun are in an advanced stage, the sources said. One of them said the two sides have given themselves time till the month-end to nail the deal, which will see Didi become the second-biggest shareholder of the EV maker after Sinomach Automobile.

The parent and its related entities own a combined 67% of Sinomac Zhijun, showed the corporate registry.

Didi has been quietly pushing ahead with a car-making project, code-named "Da Vinci", and, according to one of the sources, has about 2,000 people for it. It is keen to forge a partnership with an automaker that has an EV production license, which it needs to make such vehicles in China, the sources said.

Didi and Sinomach Zhijun did not respond to requests for comment. Nor did Shanghai-listed Sinomach Automobile, whose shares jumped by the 10% daily limit in afternoon trade on Wednesday.

The sources, who have direct knowledge of the deal talks, declined to be identified due to confidentiality constraints.