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China Renaissance joins Wall Street giants on $70bn+ Didi IPO

A Didi Chuxing cab autonomous driving car in a test drive in Shanghai. Photo: AFP

New York has beaten Hong Kong to be the listing venue for Didi Chuxing’s much anticipated IPO, but boutique China Renaissance is an underwriter alongside Goldman Sachs, JPMorgan and Morgan Stanley

(AF) Didi Chuxing filed for an IPO on Thursday June 10 that could value the Chinese ride-hailing firm at between $70 billion and $100 billion, with New York the listing venue of choice rather than Hong Kong. 

Didi’s filing with the Securities and Exchange Commission left open whether it will list on Nasdaq or the New York Stock Exchange, while noting that it has secured the ticker DIDI for use on either venue. However, any hope of Hong Kong securing the much anticipated listing was dashed.

Other details of the listing have not yet been announced, including the size of the launch, but an IPO amount of around $10 billion that could value Didi at over $70 billion is widely expected, with a launch date as soon as July.

Three of the biggest Wall Street firms will lead the deal, with Goldman Sachs, JPMorgan and Morgan Stanley announced as underwriters, but boutique investment bank China Renaissance has also secured a position as one of the initial managers.

China Renaissance was set up by Fan Bao, a Beijing-based banker who deployed experience in relatively junior roles at Credit Suisse and Morgan Stanley in building an advisory-focused investment banking boutique concentrating on Chinese clients that is comparable to firms run by veteran US bankers such as Ken Moelis or Paul Taubman.

China Renaissance won roles on IPOs such as KE Holdings and JD Health in 2020 and on Kuaishou Technology’s listing this February in Hong Kong.

The Kuaishou Technology $5.4-billion listing was the biggest technology IPO since Uber went public in 2019, and Didi Chuxing, which is widely known as the Uber of Asia, is likely to surpass the Kuaishou deal in size, and will certainly be one of the most closely watched deal launches of the rest of the year.

Didi Chuxing effectively drove Uber out of China with an aggressive campaign that put an end to Uber’s ambition to establish itself as the globally dominant ride hailing app.

But Uber secured a stake in Didi when it agreed to pull out of China in 2016 and its holding – currently around 12.8% of the Chinese firm – will register gains if the Didi IPO proves to be a success.

SoftBank, which has a 21.5% stake in Didi Chuxing, is another potential winner from the coming IPO, as is Tencent, with a holding of almost 7%.

There are plenty of risks for existing and future investors in Didi, however. The prospectus that the firm filed in the US on June 10 devoted 60 pages to alerting potential investors to risk factors. Some of those are standard exposures for any big company to litigation risk or changing regulations.

But Didi cited recent adverse publicity for China-based technology companies with listings in the US as one particular risk.

It will also be exposed to the effects of the ongoing battle between the US and China over accounting standards, and the refusal of Chinese firms and their home regulators to submit to American checks on their audits. 

This slow-moving debate could eventually be solved with a compromise, but it could also result in the delisting of Chinese companies from US exchanges.

And as the dominant provider of app-based ride hailing in China – with over 80% market share – Didi is also highly exposed to politically-inspired regulatory changes within China.

Didi’s founders Cheng Wei and Jean Liu included a personal letter in their IPO prospectus that cited their start on the streets of Beijing and the changes to business practices that they made after two of their drivers were convicted of murder in 2018.

They also stressed their commitment to electric vehicle use and “a future mobility world where our cities are lovely and livable, and our lives are easier and better”.

Kuaishou Technology saw a rise of over 200% in its shares soon after its February Hong Kong IPO, before later falling over 50% from its high of the year. And more recently Kanzhun’s $912 million listing on Nasdaq last week was accompanied by a 96% rise on its trading debut.

The successful US launch by Kanzhun – a Chinese online recruitment platform that is backed by Tencent – could give a boost to the coming Didi Chuxing IPO.

But investors should be prepared for future volatility in Didi’s US-listed stock, even if its underwriters manage to deliver a quick boost for IPO buyers.


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Jon Macaskill

Jon Macaskill has over 25 years experience covering financial markets from New York and London. He won the State Street press award for 'Best Editorial Comment' in 2016


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