Didi IPO Pricing: Seeking to Raise $4 Billion at Valuation of $62 Billion to $67 Billion, Books Already Fully Covered on First Day

June 25, 2021 6:27 AM EDT
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The largest Chinese ride-hailing company Didi Global announced the expected pricing of its much-anticipated initial public offering (IPO).

Didi is seeking to secure $4 billion by selling 288 million American depositary shares at $13.00 to $14.00 per share.

The company is looking to hit a valuation of between $62 billion to $67 billion, although the fully diluted valuation could surpass $70 billion, according to the Wall Street Journal. Didi could opt to sell an extra 43.2 million shares to raise up to a further $605 million.

The company is looking to use the raised proceeds in investing in technology, introducing new products, as well as expanding its operations outside of China. Reuters reports that the bookbuilding has been closed on the first day already.

"Many investors still doubt if Didi can maintain a high growth rate for its core ride-hailing business in China. Its market share is already very high in big cities, which means there is limited room for its future growth," Reuters cited an investor at one Hong Kong-based hedge fund.

"It’s also challenging for the company to expand in lower-tier cities due to increasing competition from rivals, not to mention the potential impact of a regulatory crackdown."

Didi made its name in 2016 after it forced Uber from Chinese market after the two were engaged in a brutal price war. Uber retreated and merged its China unit with Didi, in exchange for a 12.8% stake that is now worth billions of dollars.

Earlier, Didi said it recorded sales of 141.74 billion Chinese Yuan ($21.63 billion), which represents a decrease of 8.4% compared to a year ago. For the entire 2020, the company posted a loss of $1.63 billion. However, in the first three months of this year, Didi made a profit of about $30 million.

The company was founded in 2012 by Cheng Wei, who owns a 7% stake in Didi and controls 15.4% of its voting power. SoftBank is the biggest shareholder with a stake worth 21.5%.

Didi plans to list on the New York Stock Exchange under the ticker “DIDI.”

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