Chinese Ridesharing Firm Didi Raises $4.4B in US IPO

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by Benjamin Godfrey · 3 min read
Chinese Ridesharing Firm Didi Raises $4.4B in US IPO
Photo: DiDi

The public debut of Didi is the largest of a Chinese company since Alibaba Group raised $25 billion back in 2014

Chinese ride-sharing service provider Didi Global Inc has raised the sum of $4.4 billion in the United States Initial Public Offering (IPO) on Tuesday. Per a Reuters report citing two people familiar with the matter, the company’s IPO was priced at the top of its proposed range of $14 per share. The company sold 317 million American Depository Shares (ADS), up from the initially planned 288 million shares.

Didi is a Chinese version of the popular American ride-hailing service Uber Technologies Inc (NYSE: UBER) and has charted a growth path for itself since it was founded in 2012. The company has dominance in China after winning a pricing war with Uber. The company’s services are relatively cheaper for consumers, and the percentage cut that goes to the drivers is larger when compared to Uber’s.

Unable to compete with Didi’spricing model, Uber sold its Chinese operations to Didi for a stake in the company. Per the current IPO, Didi’s valuation is pegged following the cash raised is pegged at $73 billion on a fully diluted basis, and $67.5 billion on a non-diluted basis. The company pushed its proposed funding limit as the order books were oversubscribed more than once. Following the IPO funds raised, Didi is set to go public on the New York Stock Exchange (NYSE) on July 30.

Chinese Didi IPO: Analysts Advise to Go All-in

The IPO push of the Chinese ride-sharing firm, Didi comes on the heels of a burgeoning US IPO this year. The public debut of the firm is the largest of a Chinese company since Alibaba Group Holding Ltd (NYSE: BABA) raised $25 billion back in 2014. Per the prospects the company brandishes, analysts Jim Cramer and Douglas Kim believe the firm has a current well-priced valuation, and chances of growth.

“The volatile IPO environment helped to lower (Didi) IPO price and valuation looks attractive,” said Douglas, a London-based independent analyst, who writes on Smartkarma.

Jim Cramer also recommended the stock for a buy.

“I think the valuation seems imminently reasonable,” the CNBC “Mad Money” host said. “If you want to speculate on a Chinese IPO, you’ve got my blessing to bet on Didi. I would try to get as many shares as you can.”

However, there is an antitrust probe hovering over Didi following a strained relationship with regulators in China. While this informed the conservative approach investors chose in betting on the company, Cramer believes the development will not affect the company much, provided it stays on the good side of the authorities.

“There are some antitrust concerns here, but as long as they stay on the Communist Party’s good side,” Cramer said. “I doubt they’ll have much trouble with the regulators.”

The company will trade under the ticker symbol ‘DIDI’.

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Benjamin Godfrey

Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.

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