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Didi pulls off biggest Chinese US IPO since Alibaba, outperforms Uber launch
A Didi autonomous taxi takes a pilot test drive on the streets in Shanghai. Photo: AFP.

Didi Chuxing raises $4.4 billion in New York IPO to hit a value of around $70 billion, with better post-pricing performance than US rival Uber in its 2019 flotation 

 

(AF) China’s dominant ride-hailing firm Didi increased the initial public offering (IPO) of Didi Global to raise $4.4 billion on Wednesday June 30 and saw its shares rise by almost 30% before settling back close to their listing price of $14 by the close of trading.

The launch was much better received than the 2019 IPO of Didi’s global rival Uber in 2019, which fell in price on its launch day, but Uber will be pleased by the reception of a deal that values its own holding in Didi at over $8 billion.

Didi managed to force Uber out of China in 2016 and end the US firm’s ambition to stand alone as the dominant global ride hailing app, but the two firms cut a deal at the time to give Uber a holding in Didi.

Softbank’s Vision Fund and Tencent are other big winners from the Didi IPO as the value of their stakes has increased.

The offering by Didi on the New York Stock Exchange was the biggest US IPO of a Chinese firm since Alibaba’s $25 billion listing in 2014.  

Didi’s stock started trading at $16.65, up around 19% compared with the IPO price of $14 per share. It had priced an upsized offering of 316.8 million American Depositary Shares at the upper end of its $13 to $14 range, raising $4.4 billion.

At one point on Wednesday the shares were almost 30% above their IPO price, before falling back later in the trading session to close just over $14 for a minimal gain. 

The biggest Chinese listing in the United States previously this year was by Full Truck Alliance, which is often referred to as “Uber for trucks”, just as Didi is sometimes called the “Uber of China”.

Full Truck Alliance raised $1.6 billion last week, while grocery firm Dingdong has also just issued shares.

Taxi-hailing app, 16 countries

Didi was founded in 2012 by Cheng Wei as Didi Dache, a taxi-hailing app. It merged with peer Kuaidi Dache to become Didi Kuaidi and was later renamed Didi Chuxing.

Cheng, who was born in 1983 in a small town in the southeastern province of Jiangxi was worth $1.2 billion prior to Didi’s market debut, according to Forbes.

At the debut price, Cheng’s stake in Didi is worth $5.22 billion. Cheng recounts that he got the idea for a ride-hailing platform on a winter night in Beijing when he had trouble getting a taxi. 

SoftBank is Didi’s largest investor and will own a 20% stake in the firm following the IPO. Tencent will hold 6.4%, while Uber will retain 12% of Didi. Cheng will own a 6.5% stake in the company he built.

Didi in 2018 decided to invest $1 billion in its auto services business as part of a larger unit rebranding. It has also invested heavily to expand its core business outside its home market by either investing in local partners or launching services.

Didi has a dominant position in the online ride-hailing business in China and operates in 4,000 locations across 16 countries. It has more than 490 million annual active users, according to its recent regulatory filing for the US IPO.

Its offerings include private car-hailing, sharing bikes, delivery, freight and logistics, and financial services.

Didi’s listing makes it the latest Chinese firm to tap US equity markets despite ongoing political tensions between Washington and Beijing.

Morgan Stanley Investment Management had indicated interest in subscribing to up to $750 million worth of stock in Didi’s IPO and Singapore’s Temasek took $500 million.

Goldman Sachs, JP Morgan and Morgan Stanley were the lead underwriters, with boutique investment bank China Renaissance among other bookrunners.

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Didi pressing on with mega-IPO despite antitrust violations probe

 

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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