Didi Chuxing has applied to publish what could be one of the biggest initial public offerings (IPOs) of the year. China’s Ride Hailing app released its prospectus late last week, ready to raise billions of dollars on its debut on the US Stock Exchange in July.
The company didn’t disclose how much it would raise, but Reuters reported that Diddy could raise about $ 10 billion at a valuation of nearly $ 100 billion. Meanwhile, The Wall Street Journal cited a $ 70 billion valuation. The success of the IPO could be a huge win for major shareholders Uber and SoftBank.
Uber now owns a 12.8% stake in the company after selling its Chinese ride-hailing service business to Didi in 2016. SoftBank’s Vision Fund holds a 21.5% stake in the company. According to the prospectus, Diddy’s 38-year-old founder, Chen Wei, owns a 7% stake in the company and controls 15.4% of its pre-IPO voting rights. A former Alibaba employee founded Diddy in 2012. Chinese high-tech multinational company Tencent holds a 6.8% stake.
The company reported revenue of $ 21.6 billion last year. However, the Covid-19 pandemic incurred a net loss of $ 1.6 billion. Revenues more than doubled to $ 6.4 billion in the previous quarter as China recovered from the health crisis. The company also reported a net profit before specific payments to shareholders of $ 837 million and a quarterly comprehensive net profit of $ 95 million.
With a $ 10 billion valuation since Alibaba raised $ 25 billion in 2014, Diddy’s listing will be the largest offer of Chinese stock in the United States.
The initial public offering company will also be a monumental year for China’s high-tech public floats. In January, Kuaishou, a short video app, raised over $ 6 billion on the Hong Kong Stock Exchange (HKEX). This is currently the largest IPO in Hong Kong. Last month, JD Logistics, the distribution arm of Chinese e-commerce giant JD.com, raised $ 3.1 billion in HKEXIPO.
Didi Didi was led by Goldman Sachs, Morgan Stanley and JP Morgan Chase and applied for publication under the trade name Xiaoju Kauizhi.
According to GlobalData’s corporate profile, Didi offers app-based transportation services such as taxis, buses, designated driving, enterprise solutions, bicycle sharing, electric bike sharing and automotive solutions, and food delivery services.
Its DiDi platform provides 10 billion passenger trips annually. The company serves 550 million users in more than 400 cities in China, Brazil, Chile, Mexico, Australia, Colombia and Japan.
Didi Chuxing, the Chinese ride-hailing company, made its initial public offering filing public on Thursday, as ride-hailing services begin reviving with the receding of the pandemic.
Founded in Beijing in 2012, Didi began as a taxi-hailing service before expanding into other forms of transportation. In 2015, it merged with another Chinese rival, Kuaidi Dache, to form what became Didi Chuxing.
Didi has since been dominant in China. In 2016, Uber, which had been spending heavily to grow in China, sold its Chinese operations to Didi. (Uber was granted a stake in the resulting company.) Didi now operates in 15 countries, including Brazil and Mexico.
The company’s I.P.O. is likely to be closely scrutinized amid a wave of other technology offerings and as Beijing has begun to rein in domestic tech giants. Didi was valued at $56 billion in 2017 and its investors include SoftBank of Japan and Mubadala, an Abu Dhabi state fund.
Didi’s filing, made under its formal name, Xiaoju Kuaizhi, showed that revenues declined 8 percent to $21.63 billion last year as passenger numbers slid during the pandemic. The company lost $1.6 billion last year, though it reported a profit of $30 million in the first quarter of this year. Like most ride-hailing companies, Didi has historically been unprofitable.
Didi said that an I.P.O. would fund an expansion.
“We aspire to become a truly global technology company,” Didi’s founders, Cheng Wei and Jean Liu, wrote in a letter included with the filing. “What we have learned and built is relevant across the globe — in Latin America, Russia, South Africa or anywhere where affordable, safe and convenient mobility is valuable.”
Other ride-hailing services have reported that business has been recovering. Last month, Uber said revenue for the first three months of the year — excluding the costs of a settlement — was up 8 percent from a year ago, to $3.5 billion. The company lost $108 million.
