Chinese carpooling giant Didi Chuxing has filed an initial public offering in the United States which is expected to be one of the highest quotations of the year.
The Beijing-based company, which has filed under its legal name Xiaoju Kuaizhi, said it would be listed under the symbol Didi on the Nasdaq or the New York Stock Exchange. Didi did not specify a timeline or the amount he plans to raise, but it is widely reported that he is aiming for a valuation of up to $ 100 billion in his long-awaited public debut.
The company is currently valued at $ 62 billion, making it the fourth most valuable unicorn in the world (start-up with a valuation of $ 1 billion or more), according to CB Insights. After a difficult 2020, when the lockdowns induced by the pandemic led to an 8.5% drop in revenues to $ 21.6 billion, Didi’s activities are rebounding strongly.
In the first three months of this year, revenue more than doubled to $ 6.4 billion, and the company managed to make a profit of $ 30 million, against heavy losses totaling hundreds of millions of dollars every year for the past three years. Didi claims 493 million annual active users from 15 countries, but around 90% of its revenue is still generated in China.
The company has made international expansion a pillar of its future growth. A third of the funds raised during the IPO will be intended to increase its presence in certain international markets, according to the prospectus. It will also reserve another third to invest in technologies ranging from autonomous driving to electric cars, the prospectus says. The rest is intended to generate business purposes.
Founded in 2012 by former Alibaba executive Cheng Wei, Didi is known for pushing Uber out of China in 2016, when the US rideshare company agreed to sell its China business to Didi in exchange for a stake in the company. Today, Cheng owns 7% of Didi. Softbank’s Vision Fund is the largest shareholder with a 21.5% stake, followed by Uber’s 12.8% stake, according to the prospectus. Chinese web giant Tencent also owns 6.8%.
In the summer of 2018, the company faced its ‘biggest challenge’ when two female passengers were murdered while using its Hitch carpooling service, prompting the company to suspend Hitch for more than ‘one year and improve its security measures.
“In the summer of 2018, two tragic security incidents occurred on our ‘Hitch’ platform,” General Manager Cheng and Chairman Jean Liu wrote in a letter incorporated into the prospectus. “These shook us deep inside us. We felt a tremendous sense of sadness and responsibility and began a period of deep self-reflection. “
Besides safety, the company also cited other risks in its prospectus. They include increased competition, a potential escalation of tensions between China and the United States, as well as stricter enforcement of Chinese anti-monopoly laws that could lead to fines or investigations.