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An autonomous vehicle branded with Didi Chuxing’s sign at the World Artificial Intelligence Conference (WAIC) in Shanghai on Thursday, August 29, 2019. Photo: Bloomberg

Didi files to raise US$4 billion in New York IPO, helping China’s dominant ride-hailing app catch up with Uber in value

  • Didi, which filed under the name Xiaoju Kuaizhi, plans to sell 288 million shares at US$13 to US$14 a share
  • The US IPO could value the ride-hailing company at up to US$67 billion
Didi Chuxing has applied to raise up to US$4 billion in New York, as China’s dominant ride-hailing app pushes ahead with the largest initial public offering (IPO) by a Chinese company in the United States since 2014 under a cloud of antitrust investigations at home.
The Beijing-based company, filing under the name Xiaoju Kuaizhi, plans to sell 288 million American depositary shares (ADS) at between US$13 and US$14 each, according to a regulatory filing with the US Securities and Exchange Commission on Friday.
The offering values Didi at about US$67 billion at the top end of its price range, almost 8 per cent higher than its US$62 billion valuation during the last fundraising round in 2019. The flotation of Didi’s stock would be the biggest by a Chinese company since 2014, when this newspaper’s parent Alibaba Group Holding raised US$25 billion in New York. The IPO also would be one of the largest in the US in the past decade.


China’s ride-hailing drivers install plastic shields to prevent coronavirus infection

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Didi’s fundraising target is a substantial climb down from the US$10 billion contemplated earlier, which would have valued the company at up to US$100 billion as it marks its ninth birthday this month, putting it a nose ahead of Uber Technologies’ US$95.1 billion as of Thursday’s trading close in New York.

China’s regulators have begun an antitrust investigation into the business practices of Didi, with 90 per cent share of China’s US$3.9 trillion ride-hailing market, Reuters reported on June 17, citing sources familiar with the matter. Didi declined to comment, calling the Reuters report “unsubstantiated speculation”.
Didi-Chuxing's dominance of China's ride-hailing industry. SCMP Graphics
The scrutiny of ride-hailing is the latest in a series of crackdowns on China’s technology industry, which included slapping Alibaba with a record 18.2 billion yuan (US$2.8 billion) fine in April for anti-monopoly behaviour. Dozens of Chinese tech firms including Didi, Tencent Holdings and, were warned by regulators in April to “pay full heed” to Alibaba’s case.

Listing on the New York Stock Exchange (NYSE) under the mnemonic DIDI, the company’s 2020 revenue fell 8.4 per cent to 141.7 billion yuan (US$21.9 billion), from 154.8 billion yuan in 2019, as social distancing measures and lockdown orders during the global coronavirus pandemic crimped travelling everywhere. The company reported annual losses in 2018, 2019 and 2020.

It turned a profit in the first quarter, earning 196 million yuan, compared with a loss of 3.98 billion yuan in the same period in 2019, as life gradually returned to normal in mainland China, the first major economy to emerge from the coronavirus lockdown.

Cheng Wei, founder and chief executive officer of Didi Chuxing, during the ride-hailing service’s Didi Premier brand upgrading event in Beijing on June 29, 2018. Photo: Handout

Didi was founded in 2012 by former Alibaba salesman Cheng Wei, who owns 7 per cent of the shares and controls 16.2 per cent of its voting power ahead of the IPO, according to the company’s prospectus.

Didi’s New York IPO follows the steady march of Chinese companies seeking to raise funds in the world’s largest capital market – capitalised at US$49 trillion, four times bigger than China’s US$11.8 trillion – defying the deterioration in US-China relations over everything from policies on Hong Kong, Taiwan to human rights in Xinjiang.

A number of Chinese unicorns, or private companies valued at more than US$1 billion, are seeking US listings. They include ByteDance’s Chinese short-video platform Douyin, Ant Group-backed bike-sharing giant Hello, and Tencent-backed online education firm Huohua Siwei. The Uber-like Full Truck Alliance and grocery apps Missfresh and Dingdong Maicai, recently filed to raise capital in New York, as the US capital market and its vast investor base remains appealing to many seeking a higher profile globally or necessary cash to expand.

Didi’s investors include SoftBank, Tencent, Alibaba, Toyota Motor and Uber. The company has raised US$19.2 billion of capital in multiple rounds of private- market fundraising since it 2012.

On June 4, the Biden administration expanded a ban that prohibits Americans from investing in Chinese companies that purportedly have ties to the Chinese military, raising the total number of blacklisted companies to 59.
On Thursday, the Biden administration also expanded the so-called entity list to include five companies with operations in Xinjiang, making it harder for them to buy US technology, and restricted importation materials from the region used to make solar panels.

Like a number of US-listed Chinese companies including Alibaba and Baidu, Didi could pursue a secondary listing in Hong Kong in the future once its shares are primarily listed in the US.

On Thursday, Chinese electric vehicle maker Xpeng said it planned to raise up to HK$17.6 billion (US$2.3 billion) in Hong Kong, in a process called a dual listing. The Guangzhou-based company listed in New York in August 2020.
This article appeared in the South China Morning Post print edition as: Didi looks to raise up to US$4b in New York