HONG KONG (BLOOMBERG) – Chinese ride-hailing giant Didi Chuxing is looking to raise as much as US$4 billion (S$5.4 billion) in one of the biggest United States initial public offerings (IPOs) of the past decade.

Didi, which is one of the largest investments in SoftBank Group’s portfolio, is marketing 288 million American depositary shares (ADSs) for US$13 to US$14 apiece, according to a filing on Thursday (June 24) with the US Securities and Exchange Commission.

Affiliates of Morgan Stanley as well as Singapore’s Temasek Holdings have agreed to purchase US$1.25 billion of ADSs in the offering, according to Thurday’s filing.

At the top of the range, the company would have a market value of more than US$60 billion based on the outstanding shares listed in the filing.

That is at the lower end of a range that had stretched up to US$100 billion, Bloomberg News reported in April, suggesting investors baulked at the price tag. The same happened with US ride-hailing giant Uber Technologies, which achieved a US$75.5 billion valuation in its 2019 IPO, well below the US$120 billion that had been touted a year earlier. Uber now has a valuation of almost US$95 billion.

Didi, whose shares had reportedly been trading at a valuation of about US$95 billion on the secondary market this year, is going public in what is shaping up to be a record year globally for IPOs. A blank-cheque company listing boom in the US in the first couple months of 2021 as well historically low interest rates and monetary stimulus have led to a flurry of share sales, including by some of the world’s hottest tech companies.

Still, creeping inflationary pressures have injected some volatility into markets, causing investors to rotate away from the high-growth stocks that saw phenomenal share price rallies last year. That has rippled through into the IPO market, with investors becoming more selective about which companies they back.

Regulatory scrutiny

Didi’s offering has also been clouded by speculation over increased regulatory scrutiny. Reuters reported last week China’s antitrust watchdog has commenced a probe into the ride-hailing firm’s business practices and pricing mechanisms. The company, which was among 34 Internet giants that had been ordered by regulators in April to correct any excesses, had said in an earlier filing that while it had completed the process, it could not assure investors that the regulators would be satisfied with its efforts or that it would escape any penalties.

Didi accelerated its listing plans after its business rebounded as the coronavirus pandemic ebbed in China. In the first quarter, revenue more than doubled from the equivalent period a year earlier to reach US$6.4 billion. The company also turned a profit for the three months, reporting net income of US$837 million. It still posted a US$1.6 billion loss last year on sales of US$21.6 billion.

While Didi has expanded into 15 countries, most of its revenue still comes from its China mobility business.

SoftBank’s Vision Fund, Uber Technologies and Tencent Holdings are among Didi’s biggest shareholders with combined stakes of about 41 per cent, its filing shows. Didi co-founder Will Wei Cheng holds 7 per cent of the shares.

Uber’s retreat

Former Alibaba Group Holding staffer Cheng founded Didi in 2012. It clashed with Uber in China for years until the US firm retreated in 2016, selling its operation in the country to Didi.

Didi is looking for capital to invest in technology, grow its presence in some international markets and introduce new products, according to the filing. It is planning to make its debut in Western Europe this year, Bloomberg News reported in February, and has invested heavily in so-called community buying, one of the hottest e-commerce growth areas in China.

With the company still China’s dominant player, it is also looking to leverage that lead to expand into related arenas from autonomous driving to electric vehicles.

Goldman Sachs Group, Morgan Stanley and JPMorgan Chase & Co are leading the offering. Didi’s depositary shares, representing 72 million ordinary shares, are expected to trade on the New York Stock Exchange under the symbol DIDI.