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IPO

China's Didi prepares for IPO in US, sources say

Ride-haling giant's value expected to reach range of $70bn to $100bn

Sources say Didi has hired Goldman Sachs and Morgan Stanely to help it list on the New York Stock Exchange.    © AP

BEIJING -- Didi Chuxing, China's top ride-hailing company, is preparing an initial public offering in the U.S., Nikkei has learned. The IPO is expected to value the company at around $70 billion to $100 billion. Didi is expected to use the billions of dollars it stands to gain from the IPO to fund a global expansion.

Sources say Didi has started working with the U.S. Securities and Exchange Commission toward an IPO on the New York Stock Exchange.

Didi declined to comment.

Japanese conglomerate SoftBank Group is a Didi investor. It is unclear when the IPO might take place and how large it might be. But it could provide a tailwind for SoftBank's investment strategy.

There has been speculation that Didi would seek an IPO in Hong Kong, given U.S.-China tensions, and sources say the company is still considering a dual listing in New York and Hong Kong.

Earlier this year, the New York Stock Exchange decided to delist three Chinese telecom companies including China Mobile. The move came after former U.S. President Donald Trump signed a Presidential Decree that banned investment in Chinese companies close to the People's Liberation Army.

But despite the move, more Chinese companies have listed in the U.S. According to Chinese media reports, 34 Chinese startups went public in the U.S. last year and 20 startups followed suit from January to March in 2021.

Around 20 Chinese companies are currently working with the Securities and Exchange Commission to go public in the U.S. and more than 30 companies are considering listing there.

Many investors in the U.S. have bet money on fast-growing Chinese startups in hopes of reaping substantial returns from their American listings, a source from a Chinese financial institution told Nikkei.

Didi is expected to raise billions of dollars through the IPO. The company has hired Goldman Sachs and Morgan Stanley to arrange the IPO. The U.S. financial institutions have high hopes for the new entrants.

Apple in 2016 invested $1 billion in Didi as part of a strategic partnership. Uber Technologies appears to have a stake in the company from when Didi acquired Uber's China unit by paying for it with its own shares.

Some Japanese companies such as SoftBank Group and Toyota Motor have stakes in Didi. If Didi's IPO succeeds and accelerates its growth through new funds, it would also benefit Japanese investors in terms of their investment strategy and business expansion.

Didi was established in 2012 and has built an overwhelming share in China's ride-hailing market. It now offers such services in Japan, Australia, Russia and South American countries, and has 550 million users worldwide. The company also develops automated driving technologies and offers services that can help improve the efficiency of urban transportation and logistics.

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