Chinese shared mobility giant Didi Chuxing has abandoned plans for an initial public offering (IPO) in Hong Kong and has opted for a listing in the US capital markets, Tencent News reported Monday.
Barring any surprises, Didi's IPO will take place in the third quarter of this year at the earliest and no later than the end of this year, the report said, citing people familiar with the matter.
Given the changing external macro environment, Chinese companies may face more pressure in the U.S. capital market, and Didi's management was once ready to make its IPO in Hong Kong, the report said, adding that it ultimately decided to list in the US because of valuation and other considerations.
If it chooses a Hong Kong IPO, Didi will not only need to lobby investors to endorse its business model, but will need time to prove it. The US market was easier to get it a higher valuation because ride-hailing companies like Uber and Lyft were already listed, and Didi no longer had to explain its business logic to investors, the report said.
Didi approached several investment banks late last year and early this year, but a potential Hong Kong IPO is expected to give it a valuation cap of about $80 billion, far below Didi's expectation of a valuation of no less than $100 billion, according to the report.
Didi secretly filed IPO documents with the US Securities and Exchange Commission (SEC) for a US listing on April 9, according to a report by Tencent News in early April.
Didi's top shareholder is currently SoftBank Group, according to the report, which said the certainty of a third-quarter IPO is high, but ultimately depends on the majority shareholder.
"Investors have been pushing Didi to go public," the report quoted one investor as saying, adding that Didi's management was in fact not too keen on an IPO.
Founded in 2012, Didi offers a diverse range of services including ride-hailing, carpooling, bike-sharing, e-bike sharing, chauffeured driving, car services, delivery, freight and logistics, and finance.
Currently, Didi provides services in 14 overseas countries, including Australia, New Zealand, Japan, Brazil, Mexico, Chile, Colombia, Peru, Costa Rica, Panama, Russia, Dominica and Argentina.
As previously reported by Reuters, Didi has hired Goldman Sachs and Morgan Stanley for the IPO and is considering a valuation of at least $100 billion.
By going public in the US, Didi Travel can make direct comparisons to Uber. That's a big reason why Didi Travel chose to go for a US IPO, Tencent News reported.
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