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To achieve the targeted $100 billion valuation, DiDi should secure $10 billion from selling 10% of its shares.
Transport company DiDi Chuxing Technology Co is aiming for a $100 billion valuation after its upcoming initial public offering (IPO). Also, the company is considering New York over Hong Kong for the public offering. A reliable source also said that DiDi is eyeing a secondary listing in Hong Kong.
DiDi Eyes $100 Billion Valuation after IPO in New York
In a report, Reuters noted that the details on DiDi’s expected valuation and IPO location were revealed by two sources familiar with the matter. More sources told Reuters that DiDi has also considered the option of going public through a special-purpose acquisition company (SPAC). Listing via a SPAC will require DiDi to merge with a blank check firm that generates capital through IPO in the US. However, the sources added that DiDi sees the SPAC listing as less feasible considering its target of a $100 billion valuation.
To achieve the targeted $100 billion valuation, DiDi should secure $10 billion from selling 10% of its shares. A successful sale will make DiDi’s IPO the biggest Chinese public offering in the US after Alibaba Group Holding Ltd (NYSE: BABA). On the 19th of September, 2014, Alibaba made history as the company with the largest IPO. Alibaba hit $25 billion on the New York Stock Exchange.
Speaking further, two of the sources stated the reason behind DiDi’s choice of New York for its IPO. According to the sources, the decision for a Hong Kong IPO may result in strict regulatory scrutiny. The sources said the scrutiny may be as a result of DiDi’s business practices which include its use of unlicensed vehicles and part-time drivers. Back in 2019, DiDi was fined by Shanghai authorities over the multiple uses of unlicensed vehicles.
Speaking on the IPO timeline, Reuters cited a source who said that the offering could happen as soon as the second quarter of the year.
Increasing Chinese Companies Listing In US
Lately, Chinese companies have been listing in the US market despite the tension between the US and Chinese governments. Data by Refinitiv showed that Chinese companies raised $12 billion from US listings in 2020.
Since it was founded in June 2012, DiDi has grown over the years. The company reached a $56 billion valuation in fundraising in 2017. A year later, the company grew further and hit more than $60 billion valuation. Some sources, however, stated that DiDi had sold some of its shares at a valuation lesser than $50 billion in private trades. The sources added that DiDi is planning to buy back some shares from the company’s shareholders and executives at a valuation of $80 billion prior.
Before now, Coinspeaker had reported that DiDi may go public in Hong Kong. The report also said that the company was already in talks with investment banks regarding the IPO scheduled 2021. At the time, anonymous sources told Reuters that DiDi aimed for a $60 billion valuation after the IPO.