Chinese ride-hailing company Didi looks to raise $9bn in second-quarter listing that values it at $62bn
Chinese ride-hailing company Didi Chuxing Technology is bringing forward its listing plans to as early as next quarter to capitalise on a post-pandemic turnaround.
Didi, the largest investment in SoftBank Group’s portfolio, is looking at a valuation above the $62 billion it secured during its last funding round.
The company moved up plans from a previous target of late 2021 after its ride-hailing business bounced back with China’s success in bringing Covid-19 under control.
Based on a common 15 per cent float for mega-initial public offerings in Hong Kong, one potential venue, Didi could raise about $9bn in what would be one of the largest technology debuts globally this year.
The company has yet to decide on the listing location. Its plans remain preliminary and the timetable could still be postponed to later in the year, depending on negotiations.
“Didi does not comment on market speculation and does not have a definite IPO plan or timeline,” the company said.
An IPO would cap a remarkable turnaround for a company that ran afoul of regulators and then faced Covid-19. It hopes to tap the same investor enthusiasm that propelled technology debuts this year – from China’s video service Kuaishou Technology to South Korean e-commerce pioneer Coupang.
“Didi wants to capitalise on the red-hot market for China IPOs,” said Brock Silvers, chief investment officer at Hong Kong private equity fund Kaiyuan Capital.
Didi president Jean Liu said last year the company’s core business had already begun making small profits. Daily rides and revenue have surpassed pre-pandemic levels and are now at a record high.
The company is looking for capital to expand into online commerce and bankroll a major foray into Europe, where it must compete with Uber.
Didi, which remains the dominant player in China despite competition from rivals such as Dida, is also looking to leverage that lead to expand into self-driving and electric vehicles.
Dida filed for a Hong Kong listing last year.
“The barely profitable company thinks that a market sensing the end of Covid is supportive, but there may be red flags” in its costly overseas and business expansions, said Mr Silvers.
Founded by former Alibaba Group employee Cheng Wei in 2012, Didi clashed with Uber in China for years until its American rival retreated in 2016, selling its operation in the country to its local rival.
Didi secured a near monopoly, but then suffered a series of blows to its business and reputation.
In 2018, a pair of murders committed by contracted drivers spurred a regulatory investigation into its ability to police a vast network used by hundreds of millions. Its shares traded at a 40 per cent discount to its last valuation – even before the pandemic erupted and hobbled its business.
Didi’s stock is currently trading on the secondary market at about $43 to $49 a share, below the $51 that SoftBank paid before the government probe.
Backed by Tencent Holdings, Didi now operates in 14 countries outside its home base, mostly in Latin America. In August, it began offering ride-hailing services in Russia, marking its first direct foray into Europe and it is already an investor in Estonia-based Bolt Technology, the continent’s main rival to Uber.
Didi would also be competing against apps such as Gett, Ola and BlaBlaCar.