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China’s ride-hailing Didi raises US$4.4 billion in U.S. IPO

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Didi sold 316.8 million American Depositary Shares (ADS) at a price of $14 per share, compared with 288 million shares originally planned.

The company said Didi Global Inc, a Chinese ride-hailing company, raised $4.4 billion in a US IPO, priced it at the top of its indicated range and increased the number of shares sold.

Didi sold 316.8 million American Depositary Shares (ADS) at a price of $14 per share, compared with 288 million shares originally planned.

This will make Didi valued at approximately US$73 billion on a fully diluted basis and US$67.5 billion on a non-diluted basis.

A source told Reuters that after Didi investors’ orders were oversubscribed many times, they decided to increase the deal size. The company is expected to be listed on the New York Stock Exchange on June 30.

According to previous reports by Reuters, Didi’s IPO is more conservative than its initial valuation of as high as US$100 billion. At a briefing with investors before the launch of the IPO, the deal size was reduced.

Investors are hesitant to the US$100 billion goal because they worry that the company’s future growth prospects may be inhibited by the possibility of the transportation authorities’ future strengthening of the carpool industry.

There is also uncertainty as to how the antitrust investigation of Didi disclosed by Reuters this month will affect Didi’s business. Didi said at the time that it would not comment on “unconfirmed speculations from unnamed sources.”

The listing will be the largest US stock offering of a Chinese company since Alibaba raised US$25 billion in 2014. This year’s IPO activities are volatile and record-breaking, as the company is eager to capture the rich valuation of the US stock market.

“The turbulent IPO environment has helped lower (Didi’s) IPO prices, and the valuation looks attractive,” said Douglas Kim, an independent London analyst who writes for Smartkarma.

Didi’s initial public offering was reported early on the first day of last week’s book construction, and the investor’s book was closed on Monday, a day earlier than planned.

There are over-allotment options or green shoes, and another 43.2 million shares can be sold to increase the size of the transaction.

Didi history

Didi was co-founded in 2012 by former Alibaba employee Will Wei Cheng, who currently serves as the CEO. Liu Rangqing, a former Goldman Sachs banker and current president of the ride-sharing company, also joined the process.

The company counts SoftBank, Uber Technology and Tencent as its main supporters.

Didi is also known for successfully driving Uber out of the Chinese market after a US company lost the price war and eventually sold its Chinese business to Didi shares. Liu Zhen, the head of Uber China at the time, was Didi Liu’s cousin.

Didi is the dominant player in China, although ride-hailing services from automakers such as Geely and SAIC are grabbing market share. Uber also has a presence in Europe and South America, where Didi is expanding.

Like most ride-hailing companies, Didi has historically been unprofitable until it achieved a profit of $30 million in the first quarter of this year.

According to regulatory documents, the company lost 1.6 billion U.S. dollars last year, and revenue fell 8% to 21.63 billion U.S. dollars due to business decline during the pandemic.

Its stock will start trading under the symbol “Didi”.



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