Ride-hailing company Didi Chuxing became the largest Chinese company since Alibaba went public on the US stock exchange on Wednesday. Its initial public offering received a strong response despite regulatory tensions.
Didi started trading at $16.65 per share, and its IPO price was $14, bringing the company’s market value to $80.4 billion, but then fell below $15 after the initial surge. The stock price closed at 14.14 US dollars.
Didi Raised $4.4 billion In the IPO on Tuesday, more stocks than expected were sold at the high end of its price range. A person involved in the discussion said that after consultants discussed raising as much as $7 billion in funds, the IPO is still down from initial expectations.
People familiar with the matter said that after the fast roadshow that ended on Monday, investors moved quickly to buy shares of the IPO within the price range of Didi. People familiar with the matter said that Asian investors are expected to buy a large portion of the offering.
According to a prospectus, Singapore’s Temasek is a government-backed investment company and an existing investor in Didi. Morgan Stanley is also the underwriter of the IPO and expressed interest in buying US$1.25 billion in stocks before the roadshow.
The listing puts Didi among the top Chinese companies trading in the US market, and since Alibaba’s debut in 2014, any Chinese issuer’s US IPO has raised more funds.
Investors seem to be dismissive of concerns about rising US-China tensions and the blow to large technology companies in Didi’s home country. aim In terms of pricing and data practices for ride-hailing and freight.
Didi operates a dominant ride-hailing app in China and has recently begun to expand into new markets, while also investing money in the development of electric vehicles and autonomous driving systems.
Unlike Uber in the United States, Didi does not generate significant revenue from delivery services, although its core business has been profitable since 2019, adjusted for profit before interest, tax, depreciation and amortization. In a 2018 round of private financing, investors previously valued Didi at US$65 billion.
Didi’s IPO was conducted after several Chinese companies went public in the United States, including commercial freight company Full Truck Alliance and online grocery company Ding Dong. Since its listing last week, Full Truck Alliance’s stock price has been falling, making it worth less than US$20 billion.
The listing will pave the way for Didi to provide huge returns to investors including SoftBank Vision Fund, Uber, Silicon Valley ride-hailing company and Chinese technology group Tencent.
SoftBank’s first Vision Fund regards Didi as its largest investment, and based on the company’s opening price, the fund will hold approximately $16 billion worth of shares. Uber acquired approximately US$9.6 billion worth of shares in an agreement reached in 2016, in which U.S. companies withdrew from its China business.
Goldman Sachs, Morgan Stanley and JPMorgan Chase acted as the lead underwriters of Didi’s offering.
Additional reporting by Tabby Kinder in Hong Kong
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