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China's Didi raises $ four.four billion for topped-up US IPO – sources

© Reuters. FILE PHOTO: A Didi logo can be seen at Didi Chuxing's headquarters in Beijing, China on November 20, 2020. REUTERS / Florence Lo / File Photo

By Echo Wang, Anirban Sen, and Scott Murdoch

(Reuters) – Chinese ride-hailing company Didi Global Inc raised $ 4.4 billion in its US IPO on Tuesday, valued the price at the top of its stated range, and increased the number of shares it sold, according to two sources familiar with the matter.

Didi sold 317 million American Depository Shares (ADS) up from the planned 288 million for $ 14 each, people said on condition of anonymity ahead of an official announcement.

This would give Didi a valuation of approximately $ 73 billion on a fully diluted basis. On a basic basis, it will be worth $ 67.5 billion. The company is expected to debut on the New York Stock Exchange on June 30th.

The increase in transaction size came after Didi investors' order book was oversubscribed several times, one of the sources said.

Investors have been told they will face a reduction in their orders after the grants close on Wednesday, according to a separate source with direct knowledge of the matter.

Didi did not respond to a request for comment.

The listing the largest US stock sell-off by a Chinese company since Alibaba (NYSE 🙂 raised $ 25 billion in 2014 amid record IPO activity this year as companies rush to take advantage of lucrative valuations in the US stock market.

Didi's IPO is more conservative than its original target of valuation of up to $ 100 billion, as Reuters previously reported. The size of the transaction was trimmed during briefings with investors prior to the IPO.

This signals growing investor concerns about China's potential antitrust crackdown and a more volatile IPO environment worldwide in 2021, said Douglas Kim, a London-based independent analyst who writes on Smartkarma.

"But it seems that a lot of investors are liking this deal, the volatile IPO environment has helped lower the IPO price, and the valuation looks attractive," Kim told Reuters.

Didi's IPO was covered early on the first day of the book build last week and the investor books closed on Monday, one day ahead of schedule.

There is an over-allotment option, or greenshoe, where an additional 43.2 million shares can be sold to increase the volume of transactions.

DIDI STORY

Didi was co-founded in 2012 by former Alibaba employee Will Wei Cheng, who currently serves as CEO. Cheng was joined by Jean Qing Liu, a former Goldman Sachs (NYSE 🙂 banker and current president of the rideshare company.

The company counts SoftBank, Uber Technologies (NYSE 🙂 Inc, and Tencent as its main supporters.

Didi is also known for successfully ousting Uber from the Chinese market after the US company lost a price war and sold its China operations for a stake in Didi. Liu Zhen, the then head of Uber China, is Didis Liu's cousin.

Like most ride hailing companies, Didi has been unprofitable in the past until it turned $ 30 million in profit in the first quarter of this year.

The company reported a loss of $ 1.6 billion last year and an 8% drop in sales to $ 21.63 billion, according to a government filing, as business declined during the pandemic.

The shares are to be traded under the symbol "DIDI".

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