Thursday, December 19

Didi Chuxing considers going public in 2021; targets $60-bn valuation

Hongkong, 21st Oct 2020: China’s top ride-hailing firm Didi Chuxing is considering Hong Kong for a multibillion-dollar initial public offering (IPO) next year, people with knowledge of the matter said, rethinking previous aims to list in New York amid rising Sino-US tension.

Didi, backed by technology investment giants SoftBank , Alibaba, and Tencent, has started initial talks with investment banks for the long-awaited IPO, according to three people. The people spoke on condition of anonymity as the information, including the identity of the banks, was private.

The people said the Beijing-based company is targeting a valuation of more than $60 billion by the time of launching the IPO, expected as soon as in the first half of 2021. Founded eight years ago, Didi has begun generating healthy profit since the second quarter of the year and some of its investors are now keen to cash in, said one of the people.

Didi is also considering a new fundraising round ahead of the IPO in a bid to boost its valuation, two of the people said.

In the private secondary market, some of its shares are trading well below a valuation of $56 billion it reached in 2017. The new timetable for the IPO and the private fundraising round ahead of the planned IPO have not been reported before.

Asked by Reuters to comment, Didi said it doesn’t have any “definitive” IPO plan or timeline.

The people familiar with the matter cautioned the IPO plan is at an early stage and could change due to market conditions.

Didi had for years aimed for a US IPO because of the prestige of a New York listing, the presence of comparable peers such as Uber and Lyft and a deeper capital pool, according to two of the people.

Uber and Didi have long-standing links: after waging an expensive campaign to crack the Chinese market, Uber in 2016 sold its operation to Didi in exchange for a 17.5 per cent stake in the Chinese firm, which in turn made a $1 billion investment in Uber.

All three people familiar with the matter said Didi has now opted to consider Hong Kong for the listing amid deteriorating US-China relations that have left tech firms such as TikTok owner ByteDance in the crosshairs. US-listed Chinese companies now also face tightened scrutiny and more strict audit requirements from US regulators.