Capitalizing on the Red-Hot IPO Market
Didi, which is seen as one of the biggest threats to Uber globally, is looking to sustain its business valuation of more than $62 billion, which it reached after the latest financing round. The initial plan was to launch the Hong Kong IPO in late 2021, but the company decided to move it to an earlier date, thanks to China’s impressive recovery from the COVID-19 pandemic.
The rideshare business giant could secure $9 billion in the IPO. In that case, Didi’s IPO would become one of the largest ever. The company reportedly still hasn’t decided about the listing location, and all of the current plans remain preliminary for now.
After facing immense challenges from regulators and then the pandemic, an IPO could mark a significant rebound for the rideshare business. The company hopes the IPO will attract investors’ attention, just like other tech rivals did this year, including the video service Kuaishou and the ecommerce startup Coupang.
“Didi wants to capitalize on the red-hot market for China IPOs,” said Brock Silvers, chief investment officer at Kaiyuan Capital.
The company has so far raised $21.2 billion in a series of funding rounds starting in 2016. The Chinese rideshare business represents the largest investment in SoftBank Corp.’s portfolio and is the biggest rideshare company in China since Uber sold its Chinese arm to Didi in 2016.
The company’s core operations have already returned to profitability, and its rides and revenues have surged above the pre-pandemic levels, standing at new highs, according to Jean Liu, the president of the company.
Didi plans to use the proceeds to expand into the online market and fund its large-scale expansion into Europe, where it will compete with Uber, the largest rideshare company in the world. Furthermore, the business also plans to use its lead in the Chinese market to invest in other areas, including autonomous driving and electric vehicles (EV).
“The barely profitable company thinks that a market sensing the end of Covid is supportive, but there may be red flags,” added Silvers, referring to Didi’s expensive expansion plans, its costly overseas and business expansions.
China’s rideshare business giant Didi is looking to move its IPO to as soon as the next quarter in an effort to take advantage of the post-coronavirus rebound. The company is seeking to raise $9 billion.