Didi Global Inc, the ride-sharing company from China, raised $4.4 billion in its U.S. IPO on Tuesday as informed by Reuters. The company sold 317 million American Depository Shares (ADS) at $14 apiece, more than the 288 million initially intended.
Hottest IPO so far in 2021
With this debut, Didi would reach a $73 billion valuation on a fully diluted basis, and a $67.5 billion valuation on a non-diluted basis. All eyes are on the company, which will also debut in the New York Stock Exchange on June 30.
Further, there is a greenshoe option in which another 43.2 million shares can be unlocked for sale to increase the size of the deal.
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Didi’s IPO is bound to become one of the most successful listings this year, together with that of Robinhood Markets Inc. It will also be the largest U.S. share sale by any Chinese firm after Alibaba Group (HKG:9988) scooped $25 billion in 2014.
Didi was aiming at $100 billion valuation
One of the sources cited by Reuters asserted that the decision to increase the deal size arrived, “after the Didi investor order book was oversubscribed multiple times.”
Still, the company was aiming for a $100 billion valuation but the deal’s size was shrunk during briefings with investors ahead of the IPO’s launch.
The grounds for such retargeting was the likelihood of ride-sharing service regulations meddling with Didi’s future growth, as well as the talk of an antitrust probe and its subsequent blow to its business ––the company back then referred to the matter as “unsubstantiated speculation from unnamed source(s).”
A volatile IPO environment
The profitable valuations recently seen in the U.S. stock market are the context of Didi’s successful listing, as “the volatile IPO environment helped to lower (Didi) IPO price and valuation looks attractive,” said analyst Douglas Kim.
Founded in 2012 by former Alibaba sales manager Cheng Wei, Didi began operating as a taxi booking service in China until 2016, when regulation allowed for ride-sharing services. Cheng was joined by Jean Qing Liu, a former Goldman Sachs banker who is the current president of the company.
Similar to other ride-sharing companies, Didi became profitable long after its creation, reporting $30 million in the first quarter of 2021. Due to the pandemic, the firm yielded $1.6 billion losses last year, dropping revenue by 8% to $21.63 billion.