HONG KONG (BLOOMBERG) – Chinese ride-hailing giant Didi Global Priced shares in its United States initial public offering at the top of a marketed range to raise at least US$4 billion (S$5.4 billion) and will likely add to that sum by expanding the size of the share sale, according to people familiar with the matter.
Didi, which planned to sell 288 million American Depositary Shares (ADSs), priced them at US$14 each on Tuesday (June 29) after marketing them for US$13 to US$14, said the people, who asked not to be identified because the details were not public yet. A final decision has not been made on increasing the number of shares being sold, the people said.
A representative for Didi declined to comment.
At US$14 a share, the IPO would raise more than US$4 billion before any increase in the number of shares, making it the second-largest US IPO by a Chinese company on record, after Alibaba Group Holding’s US$25 billion debut in 2014, according to data compiled by Bloomberg.
The IPO shows investors are backing Didi despite Beijing’s scrutiny of Chinese Internet firms, which has stoked uncertainty ahead of its debut.
The price would give Didi a market value of about US$67 billion, based on the outstanding shares listed in its filings with the US Securities and Exchange Commission. That is well below the peak of a range that had stretched up to US$100 billion as recently as a few months ago.
Even though it is set to rank among the year’s biggest listings, the relatively modest showing by Uber Technologies’s peer and one-time rival reflects both investors’ increasing caution over pricey growth stocks, and China’s recent crackdown on its biggest tech players.
Didi’s IPO comes in a year that is on track to set a record for first-time share sales, with almost US$351 billion raised to date. More recently, creeping inflationary pressures have injected volatility into the IPO market.
The ride-hailing company is grappling with an antitrust probe into China’s Internet giants, a source of uncertainty for the firm and peers such as its major backer Tencent Holdings. Didi, which was among 34 technology firms ordered by regulators in April to correct excesses, warned in an earlier filing that it could not assure investors that government officials would be satisfied with its efforts or that it would escape penalties. In May, the antitrust watchdog ordered Didi and other leaders in on-demand transport to halt practices from arbitrary price hikes to unfair treatment of drivers.
After the coronavirus pandemic delivered an initial hit to its business last year, Didi rebounded quickly. 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.
The company plans to use the IPO funds to invest in technology, grow its presence in some international markets and introduce new products, according to its US filings. 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.
The offering is being led by Goldman Sachs Group, Morgan Stanley and JPMorgan Chase & Co. In all, Didi appointed 20 advisers to manage the IPO. Its ADSs, four of which represent an ordinary share, are slated to start trading on Wednesday on the New York Stock Exchange under the symbol DIDI.