Didi, the largest ride hailing company in China, has gone public in the U.S. On Tuesday, the company was able to raise $4.4 billion. According to the company, this placed it at the top of its indicated range and the number of shares sold were increased. The firm sold 316.8 American Depositary Shares (ADS). It had estimated that it would sell 288 million shares at $14 per share. The company a $73 billion valuation on a non-diluted basis.
A source told Reuters that the Didi investor order book was oversubscribed several times. The ride hailing company decided to increase the deal size by ten percent. Investors are backing the Chinese firm, despite recent scrutiny of Chinese internet firms by Beijing.
Reuters had previously reported that the company had an initial estimate of $100 billion but investors were not convinced about the valuation due to the possibility of future regulations that might be placed on ride hailing apps in future.
The agency had also reported an anti-trust investigation into the company and its effect on its revenues. At that time Didi had responded saying that it would not comment on unsubstantiated rumors from anonymous sources.
Didi was founded in 2012 by two Chinese experts
- Will Wei Cheng, a former employee from Alibaba. He is the chief executive officer.
- Jean Qing Liu, a former banker from Goldman Sachs. He is the current president.
Didi has SoftBank, Uber Technologies and Tencent as its main backers. It had successfully overtaken Uber in China using a price war. Uber ultimately sold its operations in China to Didi for a stake in the company.
Through the years Didi has followed the trend of other ride hailing platforms and reported losses. According to a regulatory filing, it reported a loss of $1.6 billion in 2020. It also faced an eight percent drop in revenues which totaled $21.63 billion, as a result of the economic slowdown due to the pandemic. However, it has reported a profit of $30 million in Q1, 2021.
It is planning to use the revenues from its IPO for investment in technology, new products, and an expanded market across the globe, according to its U.S. filing. On June 30, Didi Global Inc. (DIDI.N) is making its debut on the New York Stock Exchange.
