Didi Chuxing, China's Ride-Hailing Giant, Unveils U.S. IPO Filing -- 2nd Update
June 10 2021 - 5:52PM
Dow Jones News
By Corrie Driebusch
Didi Chuxing Technology Co., the Chinese ride-hailing behemoth,
made its IPO papers public on Thursday, setting the company up to
raise billions and begin trading publicly in the U.S. in July.
Didi, which filed under its formal name of Xiaoju Kuaizhi Inc.,
could fetch a valuation upward of $70 billion, people familiar with
the matter said, a number that could stretch even higher amid
investors' ravenous appetite for newly public, high-growth
companies.
The company is expected to raise roughly 8% to 10% of the
valuation amount in the offering, people familiar with the matter
said, money the company says it will use to invest in technology,
grow its business outside of China and introduce new products.
Much like Uber Technologies Inc. in the U.S.,
Beijing-headquartered Didi operates a smartphone app where users
can hail rides, as well as regular taxis and carpooling services.
Didi is known for successfully pushing Uber out of China, winning a
bruising price war that ended in 2016 when Uber merged its China
unit with Didi in exchange for a stake in Didi.
Didi hasn't yet selected an exchange but said it plans to list
its American depositary shares under the symbol DIDI.
For the full year 2020, the filing shows the company posted
revenue of 141.74 billion Chinese yuan, equivalent to $21.63
billion, down 8.4% from a year earlier as the coronavirus pandemic
led to quarantines, travel restrictions and limitations on public
gatherings.
Like many technology startups, Didi has a history of losing
money, though in the first three months of 2021, it posted a profit
of 196 million yuan, or about $30 million. For 2020, it posted a
net loss of 10.68 billion yuan, equivalent to $1.63 billion, and it
also lost money in the full years 2018 and 2019.
In comparison, Uber posted full-year revenue of $11.14 billion
in 2020, with a loss of $6.77 billion.
The value of all transactions on Didi's platform fell by nearly
a third in the first three months of 2020 from a year prior, hurt
by the pandemic, and didn't start growing again until the second
half of 2020.
Didi was founded in 2012 by Cheng Wei, a technology whiz who
previously worked at e-commerce giant Alibaba Group Holding Ltd.,
and merged with a domestic rival in 2015 to gain scale. Now 38
years old, Mr. Cheng was worth $2.8 billion last year, according to
Shanghai research firm Hurun Report. He owns 7% of the company's
shares and controls 15.4% of its voting power before the IPO,
according to the filing.
Other high-profile investors in Didi include SoftBank Group
Corp., which owns 21.5% of the company prior to the IPO; Uber,
which owns 12.8%; and Tencent Holdings Ltd. entities, which own
6.8%.
While several rivals have emerged in China in recent years, Didi
retains overwhelming dominance in a Chinese ride-hailing market
that could be worth $99.5 billion by 2023, according to Daxue
Consulting, up from $53.5 billion in 2019. Didi operates in 14
countries outside China, though its home market accounts for most
of its journeys.
Last year Didi entered China's fiercely competitive
food-delivery sector, which is currently dominated by tech giants
Alibaba and Meituan. It also runs a logistics service enabling
users to book vans with drivers to transport goods in or between
China's main cities.
Earlier this year, Didi was one of several big tech companies
fined by Chinese regulators for alleged monopolistic practices.
Last month regulators summoned Didi and nine other mobility
companies for a warning over their treatment of drivers.
Like other technology companies, Didi is now moving to develop
its own electric vehicles with help from legacy auto players. Last
month it formed a strategic partnership with state-run auto maker
Guangzhou Automobile Industry Group to develop autonomous EVs. Didi
began working on autonomous-driving capabilities in 2016, and
launched a robotaxi service in Shanghai last year.
Julie Steinberg contributed to this article.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
(END) Dow Jones Newswires
June 10, 2021 17:50 ET (21:50 GMT)
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