In April, we had reported that Didi Chuxing, Uber’s Chinese counterpart and the biggest ride-hailing firm in the country, had filed for a US IPO. That much-anticipated IPO finally came to pass after Didi’s shares rose by nearly 19% on its New York Stock Exchange (NYSE) debut on Wednesday. It raised $4.4 billion in the IPO, valuing the company at about $73 billion and marking the biggest US listing by a Chinese company since Alibaba raised $25 billion in 2014.
According to Reuters sources, Didi’s stock was priced at the top end of its indicated range, increasing the number of shares sold. It sold 317 million American Depository Shares (ADS) at $14 apiece (exceeding its initial goal of 288 million shares after the Didi investor order book was oversubscribed multiple times), valuing Didi at $67.5 billion on a non-diluted basis.
While Didi had started trading at $16.82 a share on the New York Stock Exchange, an increase of 30% from the initial $14-a-share offering price, investor interest decreased throughout the day, and Didi closed at $14.20 per share.
Didi made its debut, trading under the ticker DIDI. The company said that 30% of the amount raised would go to expand its business in international markets, while another 30% would be utilized in improving technology capabilities in various aspects including ride-sharing, electric cars, and autonomous driving. About 20% will be used to launch new products and expand existing product categories to continuously improve the user experience, while the remaining 20% might be used for other potential strategic investments.
When Didi had filed for the IPO, it had aimed for a valuation of up to $100 billion, raising concerns that the prospects of the future growth of the firm would be curbed by the chance of greater regulation of the ride-sharing sector by transport authorities in the future. Add to that the recent times which have been harsh for the ride-hailing sector, owing to the pandemic and subsequent lockdown, and you have a host of valid concerns.
Didi did not respond to a request for comment.
The nine-year-old Didi, founded by current CEO Will Wei Cheng, was the reason behind Uber’s departure from the Chinese market – in fact, Uber had to sell its operations in the country to Didi for a stake. It counts Tencent, Uber, and SoftBank among its investors, and is expanding operations in South America and Europe and well.
“The volatile IPO environment helped to lower (Didi) IPO price and valuation looks attractive,” said Douglas Kim, a London-based independent analyst. Didi’s IPO was covered early on the first day of the book-build last week and the investor books were closed on Monday, a day ahead of schedule.