Didi is said to accelerate IPO plans as business recovers

Photographer: Qilai Shen / Bloomberg

Chinese giant of passenger transport Didi Chuxing Technology Co. is accelerating plans for an initial public offering next quarter to capitalize on a post-pandemic shift, people familiar with its plans said.

Didi, the largest investment in SoftBank Group Corp.’s portfolio is targeting a valuation higher than the $ 62 billion it earned during its latest round of funding, said the people, who asked not to be identified on an internal matter. The company advanced plans for an earlier target of late 2021 after its The Uber-type vehicle transportation business bounced back with China’s success in controlling Covid-19.

Based on a common float of 15% for mega IPO in Hong Kong, a potential location, Didi could raise approximately $ 9 billion in what would be one of the largest technology debuts globally in 2021. The company has not taken a final decision on the listing. location, one person said. Didi’s plans remain preliminary and the timing could still be delayed until the end of the year, depending on negotiations.

An IPO would cap a notable turnaround for a company that came into conflict with early regulators and then Covid 19. It hopes to tap into the same investor enthusiasm that fueled the tech debut this year of China’s video service. Kuaishou Technology for South Korean e-commerce pioneer Coupang Inc.

“Didi wants to capitalize on China’s red-hot IPO market,” said Brock Silvers, chief investment officer at Hong Kong-based private equity fund Kaiyuan Capital.

Read more: Didi, the Chinese ridesharing giant, plans to enter Europe

Didi President Jean Liu He said last year that the company’s core business had already started to generate small profits. Commuting and income have surpassed pre-pandemic levels and are now at a record high, the people said. “Didi does not comment on market speculation and does not have a defined initial public offering plan or schedule,” the company said in a statement.

The company is seeking capital to expand into online commerce and finance a major foray into Europe, where it must compete with Uber Technologies Inc. Didi, which remains the dominant player in China despite competition from companies such as Dida Inc., is also looking to take advantage of that path to expand into adjacent areas from autonomous driving to electric vehicles.

Dida applied for a listing in Hong Kong last year.

“The barely profitable company thinks a market that senses the end of Covid is supportive, but there may be red flags” in its expensive business and overseas expansions, Silvers said.

Read more: Didi is said to be close to raising $ 1.5 billion for the trucking unit

Founded by ex Cheng Wei, a staff member of Alibaba Group Holding Ltd. in 2012, Didi clashed with Uber in China for years until his American rival retired in 2016, selling its operation in the country to its local rival. Didi secured a close monopoly, but then suffered a series of blows to his business and reputation.

In 2018, a pair of murders by hired drivers prompted a regulatory investigation into their ability to police a vast network used by hundreds of millions. Its shares are trading at 40% discount to your last valuation, even before the pandemic broke out and ruined your business.

Didi’s stock is trading on the secondary market at around $ 43 to $ 49 a share currently, just below the $ 51 SoftBank bought before the government investigation, one of the people said.