China's online car-hailing giant Didi Chuxing has filed for a public listing in the New York Stock Exchange (NYSE), which is expected to be the largest IPO by a Chinese firm in the US stock market since 2014 when Chinese internet behemoth Alibaba earned the title of the biggest IPO.
The capital raised will be used to invest in technology capabilities including shared mobility, electric vehicles, and autonomous driving technologies, growing presence in international markets, as well as introducing new products, according to its prospectus filed to the US Securities and Exchange Commission on Thursday under the business entity name Xiaoju Kuaizhi Inc, with Goldman Sachs Group Inc, Morgan Stanley and JPMorgan Chase & Co leading the offering.
So far, Didi has launched operations in 14 countries outside China, hiring thousands of local employees across Africa, Asia-Pacific, Europe and Latin America. It achieved a strong market position as the second largest ride-hailing platform in Latin America and second largest ride-hailing and food delivery platform in Mexico, in terms of total transactions in 2020, according to CIC and iResearch.
Didi's global platform provided services to over 493 million annual active users and powered 41 million average daily transactions for the previous 12 months ending on March 31, 2021, according to the prospectus.
The company, backed by SoftBank and Tencent, did not reveal the size of the offering. But it could raise around $10 billion and seek a valuation of close to $100 billion, Reuters reported earlier, citing sources familiar with the matter.
It is aiming to go public in July, according to Reuters.
Didi filed confidentially for IPO in the US, Bloomberg News reported in April, and the firm considered seeking a valuation of as much as $70 billion to $100 billion in the IPO.
The expected Didi IPO comes amid escalating tensions between the two largest economies that are at loggerheads on a variety of fronts. Chinese firms have talked down concerns over geopolitical tensions.
The Biden administration has recently stepped up pressure on Chinese tech firms including blacklisting nearly 60 Chinese companies, revoking the former Trump administration's order on Chinese-owned TikTok and WeChat but substituted it with a broader review.
"The US' hostility toward Chinese firms citing national security is still growing, and the US stock market is not as tolerant and open as it was previously," an industry insider who asked to remain anonymous told the Global Times on Friday, adding that the difficulty of getting afloat in the US will mount this year, meaning the scale of Chinese new IPOs in the US will decline.
Mega IPOs like Didi's mean lucrative opportunities for Wall Street's big investment banks. If the external environment continues to deteriorate, it will also inflict damage to the US stock market, the insider said.
In 2020, Chinese companies raised $12 billion from US listings, more than triple the fundraising amount in 2019, according to Refinitiv data.
As of May 5, a total of 248 Chinese companies were listed on major US stock exchanges including NASDAQ and NYSE, up from 217 on October 2 last year, according to a report released on May 13 by the US-China Economic and Security Review Commission. During that time, 17 Chinese companies include chipmaker SMIC and the China National Offshore Oil Corp (CNOOC) were delisted from US exchanges.
In addition, for internet tech firms, they could usually get a higher valuation in US exchanges based on their stellar data traffic, the insider added.
Liu Dingding, a Beijing-based independent analyst, told the Global Times that Didi's listing in the US market will bring more exposure to global investors, which is conductive for its overseas expansion.