China’s top ride-hailing firm Didi Chuxing (滴滴出行) is considering Hong Kong for a multibillion-dollar initial public offering (IPO) next year, people with knowledge of the matter said, rethinking previous aims to list in New York amid rising Sino-US tension.
Didi, backed by technology investment giants SoftBank Group Corp, Alibaba Group Holding Ltd (阿里巴巴) and Tencent Holdings Ltd (騰訊), has started initial talks with investment banks for the long-awaited IPO, three people have said.
The people spoke on condition of anonymity, as the information, including the identity of the banks, was private.
The Beijing-based company is targeting a valuation of more than US$60 billion by the time of launching the IPO, expected as soon as in the first half of next year, they said.
Founded eight years ago, Didi has begun generating healthy profit since the second quarter of this year and some of its investors are now keen to cash in, one of the people said.
Didi is also considering a new fundraising round ahead of the IPO in a bid to boost its valuation, two of the people said.
In the private secondary market, some of its shares are trading well below a valuation of US$56 billion it reached in 2017.
The new timetable for the IPO and the private fundraising round ahead of the planned IPO have not been reported before.
Asked for comment, Didi said it does not have any “definitive” IPO plan or timeline.
The people familiar with the matter said that the IPO plan is at an early stage and could change due to market conditions.
Didi had for years aimed for a US IPO because of the prestige of a New York listing, the presence of comparable peers like Uber Technologies Inc and Lyft Inc and a deeper capital pool, two of the people said.
Uber and Didi have long-standing links: After waging an expensive campaign to crack the Chinese market, Uber in 2016 sold its operation to Didi in exchange for a 17.5 percent stake in the Chinese firm, which in turn made a US$1 billion investment in Uber.
All three people familiar with the matter said Didi has opted to consider Hong Kong for the listing amid deteriorating US-China relations that have left tech firms, such as TikTok-owner ByteDance Ltd, (字節跳動) in the crosshairs.
US-listed Chinese companies also face tightened scrutiny and more strict audit requirements from US regulators.
Uninspiring stock performances by Uber and Lyft have also discouraged Didi from seeking a US IPO, two of the people said.
Uber and Lyft are both trading below their IPO price, with Lyft’s share price falling more than two-thirds since listing.
If completed, Didi’s IPO would further burnish Hong Kong’s status as a global capital markets hub, with US$28.8 billion worth of IPOs and secondary listings carried out in the territory over the year to date, Refinitiv data showed.
That helped Hong Kong grab the second spot in the global stock exchange league table — after the NASDAQ Composite — despite the territory struggling with the economic fallout of the COVID-19 pandemic and anti-government protests.
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