© 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 Scott Murdoch, Julie Zhu, and Anirban Sen
(Reuters) – Chinese ride-hailing giant Didi Global Inc is targeting a valuation of over $ 60 billion on its New York listing, less than originally expected due to concerns about its growth prospects and the potential for tighter regulation of Chinese tech companies , Sources said.
The world's largest mobility technology platform plans to start trading on the New York Stock Exchange (NYSE) on Wednesday after a brief investor roadshow for its highly anticipated initial public offering (IPO).
It will be the largest US stock sale by a Chinese company since Alibaba (NYSE 🙂 raised $ 25 billion in 2014 and is set to be the largest US IPO this year.
Didi has set a price range between $ 13 and $ 14 per American Depositary Share (ADS), according to a regulatory filing filed on Thursday, and announced that it will offer 288 million such shares when it goes public. At the top of the range, the deal will raise $ 4.03 billion.
An over-allotment option could result in the company selling an additional 43.2 million shares to raise up to an additional $ 605 million.
The terms of the deal suggest a conservative approach for Didi, which sources said he previously envisioned a valuation range of $ 80 billion to $ 100 billion. Its valuation topped $ 60 billion a year after fundraising in 2017, sources say.
The final price will be set on Tuesday after the US market closes, according to a term sheet checked by Reuters.
The company has started with investor presentations, led by Didis Vice President and Capital Markets Chief David Xu, which will run through Tuesday.
The roadshow for a US listing this size is shorter than usual, with most typically lasting around 10 days.
Morgan Stanley According to Didis’s updated prospectus, Investment Management has expressed an interest in subscribing up to $ 750 million in shares in the IPO and Singapore’s Temasek for US $ 500 million.
The valuation target and the increase in volume were set after initial meetings with potential investors in the past 14 days. The likelihood of Didi facing increased regulation by the Chinese government has been raised as an issue, according to sources with direct knowledge of the matter.
The sources could not be named as the information was not yet public. Didi did not respond to a request for comment.
Reuters reported last week that China's market regulator has opened an antitrust investigation into Didi, citing sources with knowledge of the matter.
The State Administration for Market Regulation (SAMR) is investigating whether Didi applies competitive practices that have unfairly ousted smaller competitors. The regulatory authority is also checking whether the pricing mechanism of Didi's core business with transport services is transparent enough.
Didi then said it would not comment on "unsubstantiated speculations from unnamed sources".
Four ADS represent one Class A common share, Didi said in the filing, which was registered under its formal name of Xiaoju Kuaizhi Inc.
The company is backed by Asia's largest technology investment firms, including SoftBank Group Corp, Alibaba Group Holdings, and Tencent Holdings (OTC :).
Didi had considered Hong Kong for its initial public offering, but chose New York, in part because of concerns that a Hong Kong IPO application could be subject to stricter regulatory scrutiny of its business practices, including the use of unlicensed vehicles and part-time drivers.
With the exception of China, Didi operates in 15 countries and has more than 493 million active users per year worldwide.
Didi CEO Cheng Wei said last year the company aims to have 800 million monthly active users globally by 2022 and complete 100 million orders per day, including carpooling, bike and food deliveries.
In 2016, Uber (NYSE 🙂 sold its Chinese operation to Didi for a 17.5% stake in the Chinese company, which also invested $ 1 billion in Uber. The US company now holds 12.8% of Didi, as IPO registrations show.
Goldman Sachs (NYSE :), Morgan Stanley and J.P. Morgan are the lead underwriters for Didi's NYSE float. More than a dozen new ones were added on Thursday, including BofA Securities, Barclays (LON :), China Renaissance, City group (NYSE :), HSBC and UBS Investment Bank.