China’s Didi raises US$4.4 billion in U.S. IPO-source Reuters

Authors: Echo Wang, Anirban Sen and Scott Murdoch

(Reuters)-According to two people familiar with the matter, Chinese ride-hailing company Didi Global Inc raised $4.4 billion in a U.S. IPO on Tuesday, priced it at the top of its instruction range and added The number of shares sold.

A person familiar with the situation said on condition of anonymity before the official announcement that Didi sold 317 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 an undiluted basis.

One of the sources said 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.

Didi did not respond to a request for comment.

According to previous reports from 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 decide on the US$100 billion goal because they fear that the company’s future growth prospects may be suppressed by the transportation authorities’ stricter supervision of the ride-sharing industry in the future.

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 speculation from an unnamed source.”

This listing will be the largest of a Chinese company since its listing in the U.S. Alibaba (New York Stock Exchange ticker:) Raised $25 billion in 2014, which coincides with record-setting and volatile IPO activities this year, as the company is eager to capture the rich valuation of the US stock market.

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

Didi’s IPO was reported early on the first day of opening last week, and the investor books were 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. Jean Qin Liu, a former Goldman Sachs (NYSE:) banker and current president of the ride-sharing company, joined Cheng.

The company counts SoftBank, Uber Technology (NYSE:) Inc 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 US$1.6 billion last year, and revenue fell 8% to US$21.63 billion due to business decline during the pandemic.

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