China's Didi raises $4.4 billion in upsized U.S. IPO -sources
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[June 30, 2021] By
Echo Wang, Anirban Sen and Scott Murdoch
(Reuters) -Chinese ride hailing company
Didi Global Inc raised $4.4 billion in its U.S. IPO on Tuesday, pricing
it at the top of its indicated range and increasing the number of shares
sold, according to two sources familiar with the matter.
Didi sold 317 million American Depository Shares (ADS), versus the
planned 288 million, at $14 apiece, the people said on condition of
anonymity ahead of an official announcement.
This would give Didi a valuation of about $73 billion on a fully diluted
basis and $67.5 billion on a non-diluted basis.
The decision to increase the deal size came after the Didi investor
order book was oversubscribed multiple times, one of the sources said.
The company is expected to debut on the New York Stock Exchange on June
30.
Didi did not respond to a request for comment.
Didi's IPO is more conservative versus its initial aim for a valuation
of up to $100 billion, Reuters has previously reported. The size of the
deal was cut during briefings with investors ahead of the IPO's launch.
Investors baulked at the $100 billion target given concerns the
company's future growth prospects could be curbed by the chance of
greater regulation of the ride-sharing sector by transport authorities
in the future.
There was also uncertainty over how an antitrust probe into Didi,
revealed by Reuters this month, would impact the business. Didi said at
the time it would not comment on "unsubstantiated speculation from
unnamed source(s)".
The listing, which will be the biggest U.S. share sale by a Chinese
company since Alibaba raised $25 billion in 2014, comes amid record and
volatile IPO activity this year as firms rush to capture the lucrative
valuations seen in the U.S. stock market.
"The volatile IPO environment helped to lower (Didi) IPO price and
valuation looks attractive," said Douglas Kim, a London-based
independent analyst, who writes on Smartkarma.
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..
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President of Didi
Chuxing Jean Liu speaks during a news conference about their
Japanese taxi-hailing joint venture in Tokyo, Japan, July 19, 2018.
REUTERS/Kim Kyung-Hoon/File Photo
An over-allotment option, or greenshoe, exists where another 43.2
million shares can be sold to increase the deal size.
DIDI HISTORY
Didi was co-founded in 2012 by former Alibaba employee Will Wei Cheng,
who currently serves as the chief executive officer. Cheng was joined by
Jean Qing Liu, a former Goldman Sachs banker and the current president
of the ride-sharing company.
The company counts SoftBank, Uber Technologies Inc and Tencent as its
main backers.
Didi is also known for successfully pushing Uber out of the Chinese
market after the U.S. company lost a price war and ended up selling its
China operations to Didi for a stake. Liu Zhen, the head of Uber China
at the time, is Didi's Liu's cousin.
Didi is the dominant player in China, although ride-hailing services by
automakers such as Geely and SAIC Motor are picking up market share. In
Europe and South America, where Didi is expanding, Uber has a presence.
Like most ride-hailing companies, Didi had historically been
unprofitable, until it reported a profit of $30 million in the first
quarter of this year.
The company reported a loss of $1.6 billion last year and an 8% drop in
revenue to $21.63 billion, according to a regulatory filing, as business
slid during the pandemic.
Its shares are due to start trading under the "DIDI" symbol.
(Reporting by Echo Wang in New York and Anirban Sen in Bengaluru and
Scott Murdoch in Hong Kong; Editing by Greg Roumeliotis, Bill Berkrot
and Himani Sarkar)
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