REUTERS: Didi Global Inc shares closed marginally higher than their initial public offering (IPO) price on their first day of trading in the United States, valuing the ride-hailing behemoth at US$68.49 billion in the largest US listing by a Chinese firm since 2014. Didi’s decision to lower its value expectations after investors expressed worries about the pace and profitability of its growth into additional services and global markets was vindicated by the stock market debut.
According to Reuters, Didi is seeking for a valuation of up to $100 billion in its initial public offering.
Didi’s shares, which is backed by SoftBank, opened at US$16.65, up from its IPO price of US$14. After reaching a high of US$18 in the early afternoon, the stock began to fall. Didi raised US$4.4 billion with an upsized offering of 316.8 million American depositary shares priced at the upper end of its US$13 to US$14 range. Didi is the latest in a long line of Chinese corporations attempting to profit from the stock market’s inflated values in the United States. According to Refinitiv statistics, 29 Chinese companies raised US$7.6 billion in IPOs in the first half of the year.
Despite continued economic tensions between the US and China, as well as US concerns about the quality of audits of Chinese financial accounts, this is the case.
According to Reuters, Didi is also being investigated by Chinese officials for possible antitrust crimes.
“All of the main Chinese internet companies are now subjected to far greater scrutiny than in the past. It’s just a danger for the industry as a whole “Kathleen Smith, a principal at Greenwich, Connecticut-based Renaissance Capital, agreed. Didi was started in 2012 by Cheng Wei as Didi Dache, a taxi-hailing app, and is backed by technology investment titans Alibaba, Tencent, and Uber. It amalgamated with Kuaidi Dache to form Didi Kuaidi, which was renamed Didi Chuxing later.
According to Forbes, Cheng, who was born in 1983 in a small village in Jiangxi’s southern province and had worked as an assistant to the CEO of a foot massage company, was worth US$1.2 billion before Didi’s stock market debut.
When Cheng couldn’t find a taxi on a cold winter night in Beijing, he conceived the idea for a ride-hailing platform.
With a 20.2 percent investment in Didi, SoftBank is the company’s largest investor. Tencent owns 6.4 percent of Didi, while Uber owns 12 percent. Due to a dual-class share structure that has grown increasingly popular among computer businesses, Cheng will own a 6.5 percent investment in the company he founded while also having 35.5 percent voting power. Cheng’s share in Didi is worth US$4.45 billion based on Wednesday’s closing price. According to a regulatory filing by Uber, the company’s share in Didi is valued at US$8 billion, much more than the US$6 billion valuation it was given in 2016, when it obtained the stake in exchange for selling its China food delivery operation to Didi. 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. Didi invested $1 billion in its auto services division in 2018, as part of a bigger unit rebranding. It has also made significant investments to develop its main business outside of its home market, either by investing in local partners or by establishing services. Didi holds a commanding position in China’s online ride-hailing market, with 4,000 outlets in 16 countries. According to a recent regulatory filing, it has over 490 million annual active users. Private car-hailing, bike-sharing, delivery, freight and logistics, and financial services are among its services. The primary underwriters were Goldman Sachs (Asia) L.L.C., Morgan Stanley, and J.P. Morgan./n
