China’s Didi Chuxing said to prepare for Hong Kong IPO

Photo: Didi Chuxing

Ride-sharing specialist Didi Chuxing is preparing for a Hong Kong listing, a source close to its top executives told Caixin, as the 8-year-old company, often called the Uber of China, comes under pressure from investors looking to cash out.

The latest move marks a major development for the company, whose insiders close to CEO Cheng Wei repeatedly told Caixin in the past that there was no rush toward such a listing. Those sources told Caixin the company still has plenty of cash, with such assets now more than 50 billion yuan ($7.2 billion).

Instead, the source who disclosed the plan said the plan is being driven by some of the company’s nearly 100 investors, which include Japan’s SoftBank that poured more than $10 billion into Didi between 2015 and 2018 and is currently its largest investor. The company’s other major investors include global tech giant Apple, which in 2016 announced a $1 billion investment.

Didi declined to comment on its listing plans.

The source emphasized that the IPO process is still in the planning phases, adding that previous rumours that Didi was preparing to merge with Hong Kong-listed online-to-offline (O2O) services giant Meituan Dianping were “unreliable.”

Like its global rival Uber Inc., Didi has come under growing pressure from investors after years of devouring cash without turning any profits. The company fought a bloody war in China with Uber, before the pair merged their Chinese mainland operations in a landmark deal in 2016 that gave Uber a 15.4% stake in the merged company. Since then, Didi has been the dominant player in China, and has also expanded to a number of overseas markets including Japan, Mexico and Australia.

Also like Uber, Didi has come under scrutiny in China regarding the safety of its drivers, and safety remains one of the company’s biggest reputational and regulatory risks. In 2018, two female passengers using the company’s low-end Hitch service were murdered by drivers in separate incidents just months apart, forcing Didi to suspend the service and do a major safety overhaul. Didi finally relaunched the service late last year after taking numerous steps that it said would improve passenger safety.

Through all that, Didi’s own valuation has traveled down a bumpy road. The company, which has raised more than $30 billion since its founding in 2012, reached a peak in December 2017 when it was valued at about $56 billion after one of its last major funding rounds.

But information released by Uber in April last year in the run-up to the U.S. company’s own IPO gave Didi a valuation of about $51.6 billion, or about 10% less than at its peak. Another transaction involving shares in the company a year ago lowered the valuation further still to $47.5 billion. By comparison, Uber has a current market value of $58 billion.

Since emerging from the safety crisis of 2018, Didi has more recently had to deal with a sharp slowdown due to the coronavirus pandemic that began in China and bought much of its business to a standstill starting around the end of January. During a May interview with CNBC, President Jean Liu said the company had taken a blow during the crisis, but added that business was back and was at 60-70% of its pre-pandemic levels by May. She added that the company’s core business had already begun to be profitable at that time.

Didi has also been rolling out a steady stream of new services to diversify its business this year. In March it launched an “errand running” business that has now been extended to 21 cities. It launched a goods delivery service in June, and also operates a shared bike service.

This article was first published on Caixin Global

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.

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.