REUTERS: According to two persons familiar with the situation, Chinese ride-hailing giant Didi Global Inc collected US$4.4 billion in its US 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, this would give Didi a market capitalization of almost US$73 billion. It will be worth $67.5 billion if it is not diluted. On June 30, the company is slated to make its debut on the New York Stock Exchange. According to one of the sources, the offer size was increased after the Didi investor order book was repeatedly overcrowded. According to a separate source with direct knowledge of the situation, investors could expect their orders to be scaled down once allocations are finished on Wednesday. A attempt for comment from Didi went unanswered.
The IPO, which will be the largest U.S. share sale by a Chinese business since Alibaba raised $25 billion in 2014, comes amid a surge in IPO activity this year as companies scramble to take advantage of the stock market’s profitable valuations.
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. According to Douglas Kim, a London-based independent analyst who blogs for Smartkarma, this indicates growing investor concerns about China’s impending antitrust crackdown and a more volatile IPO environment globally in 2021. “However, it appears that many investors enjoy this deal; the volatile IPO environment aided in lowering the IPO price, and the value looks appealing,” Kim told Reuters.
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. 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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