• Didi Chuxing is the largest travel agent in China
• IPO on the New York Stock Exchange – second listing in Hong Kong?
• Government Control Concerns?
In 2016, Didi Chuxing bought the China business of his then largest competitor in the home market, Uber, after fierce competition. The company, founded in 2012, is now the largest travel agent in China and describes itself as the “world’s leading platform for mobile transport and local services”. In addition to China, the company is active in 14 other countries – Didi just announced its expansion to South Africa at the end of March – and, according to dpa reports, already recorded 550 million users last year.
In the summer of 2020, the Chinese business magazine Caixin reported, citing a source close to the company’s management, that existing investors were exerting pressure to put Didi Chuxing on the stock exchange – without giving a specific schedule. Now there is more news about the possible IPO.
Didi-IPO: Better New York than Hong Kong – or both?
The news agency Reuters reports, citing people closely related to the company, that Didi might prefer an IPO on the New York Stock Exchange to a listing in Hong Kong – or considering a second listing in Hong Kong if the IPO takes place in the US. The company is aiming for a valuation of at least 100 billion US dollars, according to two informed people. So Didi could raise about $ 10 billion from the sale of 10 percent of his shares. This could enable the company to achieve the largest IPO by a Chinese company in the US since Alibaba was in 2014. At that time, Alibaba had sales of 25 billion US dollars.
Several sources also told Reuters that Didi was discussing the option of listing through a merger with an investment vehicle (SPAC) that would raise capital through an IPO in the US – but that option is considered less feasible given the valuation objective.
Government Control Concerns?
Two of the sources said Reuters said their preference for listing on the New York Stock Exchange reflected some concerns. Concerns that an IPO application in Hong Kong may be subject to tighter government scrutiny of Didi’s business practices.
Another benefit that Didi, according to one of the sources, expects from going public in New York is a more predictable pace for a stock market listing and a deeper capital pool. According to this source, the IPO could take place as early as the second quarter, reports Reuters.
Listings of Chinese companies in the US
According to Reuters, Didi’s planned listing in the US will contribute to the strong dynamism of Chinese companies that have attracted investors in this market in recent years – despite increasing tensions between the US and China. Last year, according to data from Refinitiv, Chinese companies earned more than three times as much as in 2019 from US listings: twelve billion US dollars.
Didi Chuxing himself said, according to Reuters, that there was no concrete plan with regard to the listing target or the schedule and the Hong Kong stock exchange operator HKEX had also declined to comment on the possibility of a Didi listing on its own platform.
Finanzen.ch editors
– .
