DiDi Global Inc., a Chinese ride-hailing startup, raised $4.4 billion in its US IPO on Tuesday. DiDi issued 317 million American Depository Shares (ADS) at $14 each. Considering absolute share dilution, DiDi would receive a valuation of almost $73 billion; on a non-diluted basis, it will be valued at around $67.5 billion. On June 30, DiDi made its debut on the New York Stock Exchange. Owing to factors such as an increase in the number of potential investors as well as the existing number of shares, DiDi has been forced to revise its existing guidelines that presently govern its IPO offering. This is the largest U.S. share sale by a Chinese firm since Alibaba raised $25 billion in 2014. The offering comes during an annual surge in IPO activity as organizations compete to convince investors that are based in the U.S. stock market. However, investors have been reportedly informed that their orders are to be scaled-back, after allocations were completed on Wednesday, the 30th of June.
According to Reuters, Didi’s IPO is considered to be relatively conservative in comparison to its original market capitalization target of up to $100 billion. The size of this transaction was reduced during investor briefings before DiDi’s IPO debut, owing to investor concerns regarding a probable anti-trust crackdown being initiated by the Chinese government, as well as those concerns related to unpredictable international IPO landscapes in 2021. Didi’s IPO was completed early on the first day of the book-build last week, and investor books were closed on Monday, a day sooner than expected. There is also an existence of an over-allotment option, often known as a greenshoe, in which an extra 43.2 million shares could be made available for sale to increase the size of this deal.
Didi was co-founded in 2012 by former Alibaba employee Will Wei Cheng, who currently serves as its chief executive officer. Cheng was accompanied by Jean Qing Liu, the current president of the ride-sharing service and a former Goldman Sachs banker. Softbank, Uber Technologies Inc., and Tencent are among the company’s major stakeholders. Didi is also famous for effectively evicting Uber from the Chinese market. The American firm lost a pricing battle and wound up selling its Chinese assets to Didi in exchange for a percentage. Didi had previously remained unprofitable prior to it recording a $30 million turnover in the first quarter of 2021. According to a regulatory filing, DiDi recorded a $1.6 billion deficit last year, and an 8% decline in revenues to $21.63 billion as business prospects plummeted during the recent pandemic. Its shares are set to begin trading under the ticker “DIDI.”