THE REUTERS – According to two persons familiar with the situation, Chinese ride-hailing giant Didi Global Inc collected US$4.4 billion in its U.S. IPO on Tuesday, pricing it at the top of its suggested range and boosting the number of shares sold. According to the persons, Didi sold 317 million American Depository Shares (ADS) at US$14 each, versus the anticipated 288 million, ahead of an official announcement.
On a fully diluted basis, Didi would be worth around US$73 billion, and on a non-diluted basis, it would be worth around US$67.5 billion.
According to one of the sources, the decision to boost the offer size came after the Didi investor order book was repeatedly overcrowded. On June 30, the company is slated to make its debut on the New York Stock Exchange. A attempt for comment from Didi went unanswered. According to Reuters, Didi’s IPO is more conservative than its initial target of a valuation of up to US$100 billion. During investor briefings prior to the IPO’s launch, the deal’s size was reduced.
The US$100 billion aim was met with skepticism by investors, who were concerned that the company’s future growth possibilities will be hampered by the possibility of further regulation of the ride-sharing sector by transportation authorities in the future.
There was also uncertainty about the impact of an antitrust investigation into Didi, which was published by Reuters earlier this month. At the time, Didi stated it wouldn’t comment on “unsubstantiated speculation from unnamed source(s).” The IPO, which would be the largest U.S. share sale by a Chinese company since Alibaba raised $25 billion in 2014, comes amid record and turbulent IPO activity this year as companies scramble to take advantage of the lucrative valuations seen in the U.S. stock market. “The tumultuous IPO environment contributed to lower (Didi) IPO price and value appears appealing,” Douglas Kim, a London-based independent analyst who writes for Smartkarma, said.
Last week, Didi’s IPO was covered early on the first day of the book-build, and the investor books were closed a day ahead of schedule on Monday.
An over-allotment option, also known as a greenshoe, allows for the sale of an additional 43.2 million shares to raise the deal size.
HISTORY OF DIDI
Will Wei Cheng, a former Alibaba employee who now serves as the company’s chief executive officer, co-founded Didi in 2012. Cheng was joined by Jean Qing Liu, the current president of the ride-sharing startup and a former Goldman Sachs banker. SoftBank, Uber Technologies Inc, and Tencent are among the company’s major sponsors. Didi is also notable for effectively driving Uber out of the Chinese market after the American company lost a price war and was forced to sell its China operations to Didi in exchange for a stake. Didi’s cousin, Liu Zhen, was the head of Uber China at the time. In China, Didi is the major player, however ride-hailing services from manufacturers such as Geely and SAIC Motor are gaining ground. Uber has a presence in Europe and South America, where Didi is developing. Didi had previously been unprofitable, like most ride-hailing companies, until it declared a profit of US$30 million in the first quarter of this year. According to a regulatory filing, the company lost US$1.6 billion last year and saw an 8% reduction in revenue to US$21.63 billion as activity slowed due to the epidemic. The “DIDI” symbol will be used to trade the company’s shares. (Echo Wang in New York, Anirban Sen in Bengaluru, and Scott Murdoch in Hong Kong contributed reporting; Greg Roumeliotis, Bill Berkrot, and Himani Sarkar edited the piece.)
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