China’s Didi Chuxing picks Goldman, Morgan Stanley for mega US IPO

China's largest ride-hailing platform Didi Chuxing will start to offer services in Sydney on March 16, 2020.

China’s top ride-hailing firm Didi Chuxing has mandated Goldman Sachs and Morgan Stanley to lead its blockbuster IPO and plans to file confidentially for the New York float this month, two people with knowledge of the matter said.

Didi, backed by Asian technology investment giants SoftBank, Alibaba and Tencent, is looking to list as soon as July, according to the people.

It is eyeing a valuation of at least $100 billion via the initial public offering (IPO), Reuters reported last month. At that valuation, Didi could raise about $10 billion if it sells 10% of its shares, making it the biggest Chinese IPO in the United States since Alibaba’s $25 billion float in 2014.

Beijing-based Didi’s selection of the two banks shows it is moving forward apace in its listing plans and that the U.S. capital pool remains a big draw for Chinese companies despite heightened tensions between the world’s two-largest economies.

It also shows that for Wall Street titans, flotations of Chinese firms represent a growing business opportunity.

Didi, Goldman and Morgan Stanley declined to comment. The sources declined to be named as the information is private.

Last year, Chinese companies raised $12 billion in U.S. listings, more than triple the fundraising amount in 2019, according to Refinitiv data.

Confidential IPO filings enable companies to keep vital operational and financial information out of competitors’ hands for a few extra months.

Nine-year-old Didi was considering Hong Kong for its IPO last year as U.S.-listed Chinese firms faced heightened scrutiny and more strict audit requirements from U.S. regulators, while geopolitical tensions escalated between Beijing and Washington.

Didi later dropped that plan and has picked New York as the listing venue partly due to concerns that a Hong Kong IPO application could evoke more regulatory scrutiny over Didi’s business practices, including the use of unlicensed vehicles and part-time drivers, sources have told Reuters.

Didi has opted for New York also because of a more predictable listing pace, the presence of comparable peers like Uber and Lyft and a deeper capital pool, said the people.

The move comes even as the Securities and Exchange Commission is pressing ahead with a plan that would kick foreign companies off American stock exchanges if they do not comply with U.S. auditing standards.

Didi, which merged with then main rival Kuaidi in 2015 to create a smartphone-based transport services giant, counts as its core business a mobile app, where users can hail taxis, privately owned cars, car-pool options and even buses in some cities.

The company was valued at $56 billion in a 2017 fundraising and its valuation exceeded $60 billion a year later, sources have said.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.