Didi Chuxing, China’s leading ride-hailing platform, unveiled the filing for its long-awaited US stock market debut on Thursday, marking a further step toward what could be the world’s biggest IPO this year.
The ride-sharing behemoth, which was backed by high-profile investment firms including Softbank, Alibaba and Tencent, did not disclose a specific value for its offering size but listed it in the filing as $100 million, a placeholder figure typically used to calculate registration fees. Reuters reported that the company could raise around $10 billion through the IPO and seek a valuation of close to $100 billion, citing unnamed sources. In the event of such a valuation, Didi’s listing will be the biggest American debut launched by a Chinese company since Alibaba’s $25 billion float in 2014.
Didi confidentially filed for its IPO in April and is aiming to go public in July.
The company’s prospectus showed that it booked $21.6 billion in revenue in 2020, a 8.4% fall from a year earlier, due primarily to the impact of the Covid-19 outbreak. Prior to the pandemic, its revenue had risen 11% from 2018 to 2019.
Like many technology startups, Didi has a history of burning cash, having lost money each full year since its inception in 2012. But for the first quarter of 2021, the firm turned a profit, achieving a net income of $837 million before various payouts to shareholders, as China’s economy rebounded strongly from the pandemic-induced dip. Net income attributable to ordinary shareholders reached $30 million.
By comparison, Didi’s American ride-sharing counterpart Uber posted $2.9 billion in revenue for the first quarter, with a net loss of $108 million. Uber’s full-year net losses in 2020 reached $6.77 billion, with $11.14 billion in revenue.
However, Didi still chose to warn investors in the filing that the firm “may not be able to achieve or maintain profitability in the future”.
Didi became China’s undisputed ride-hailing champion after successfully acquiring its largest rival Uber China in 2016, a complex transaction that involved both companies owning stakes in each other. Didi’s market share has reportedly hit 90%, which also puts the company in a precarious spot as Beijing steps up its anti-monopoly campaign against the country’s big tech firms.
Didi was among 34 major Chinese internet companies which were summoned by regulators in April after Alibaba was slapped with a record $2.8 billion fine for abusing its dominant power in the online shopping market. Following the summons, Didi was ordered to conduct self-inspections and fix anti-competitive behavior. Last month, Didi issued an open letter, saying that the company will be launching a new feature to provide drivers with detailed data about their pay and commission rates.
According to Didi’s prospectus, the firm boasted over 493 million annual active users and 41 million average daily transactions for the twelve months ended March 31.
Didi said it plans to use the proceeds raised in the IPO to expand its presence in overseas markets, develop technology capabilities and introduce new products.
The company has launched operations in nearly 4,000 cities across 15 countries since it began its global expansion in 2018. Bloomberg reported that Didi will make its debut in Western Europe as soon as this year. Currently, about 12% of its annual active users are outside of China.
Didi has been building its autonomous-driving business since 2016, and now operates a team of more than 500 employees and a fleet of over 100 driverless vehicles. Didi announced in April that it has signed a deal with carmaker Volvo to develop self-driving cars for a robotaxi fleet. Multiple domestic media outlets previously reported that Didi is expected to start its own electric vehicle (EV) manufacturing subsidiary, joining a cohort of Chinese tech giants including Xiaomi, Baidu and Alibaba in angling for a piece of China’s vast and fast-growing EV market.
The Beijing-based firm has also ploughed money into community group-buying business, which allows consumers to obtain discounts by ordering groceries in groups and have them delivered to their neighborhood, competing with Alibaba and Meituan to grab larger shares of one of China’s hottest e-commerce growth areas. Didi’s CEO Cheng Wei said last November that the company’s investment in Chengxin Youxuan, Didi’s community group-buying platform, “would not be capped” and that the company would “go all out to be the number one in the market,” tech news website Protocol reported.
The company plans to list its American depositary shares under the ticker symbol “DIDI,” but hasn’t yet finalized an exchange. Didi’s filing was made under its formal name Xiaoju Kuaizhi. Goldman Sachs, Morgan Stanley and J.P. Morgan will act as underwriters of the deal.