The ride-hailing company Didi Chuxing became the largest Chinese company since Alibaba to list on US exchanges on Wednesday, following an initial public offering that received a strong response despite regulatory tensions.
Didi began trading at $16.65 per share, compared to its IPO price of $14, giving the company a market capitalisation of $80.4bn, but shares later slipped below $15 following the initial pop.
Didi raised $4.4bn in an IPO on Tuesday, selling more shares than expected at the top end of its price range. The IPO still marked a comedown from initial expectations, after advisers had discussed raising as much as $7bn, said one person involved in the discussions.
Investors moved quickly to buy shares in the IPO at Didi’s marketed price range, following a rapid roadshow that ended on Monday, said people briefed on the process. Asia-based investors were expected to buy a large chunk of the offering, the people said.
Singapore’s Temasek, an existing investor in Didi, and Morgan Stanley, which also served as an underwriter of the IPO, indicated interest in purchasing $1.25bn of shares before the roadshow, according to a prospectus.
The listing catapulted Didi into the top ranks of Chinese companies trading in US markets, raising more money from the IPO of any Chinese issuer in the US since Alibaba’s blockbuster debut in 2014.
Investors appeared to brush aside concerns about rising US-China tensions and a clampdown on big tech companies in Didi’s home country, which has taken aim at pricing and data practices in ride-hailing and freight delivery.
Didi operates the dominant ride-hailing app in China and has recently begun expanding into new markets, while also pouring cash into developing electric vehicles and autonomous driving systems.
Unlike Uber in the US, Didi does not generate substantial revenues from delivery services, though its core business has been profitable since 2019 on an adjusted basis on earnings before interest, tax, depreciation and amortisation. Investors previously valued Didi at $65bn during a private round of funding in 2018.
Didi’s IPO followed the listings of several Chinese companies in the US, including the commercial freight company Full Truck Alliance and online grocery firm Dingdong. Shares in Full Truck Alliance have fallen since the company went public last week, giving it a market capitalisation of under $20bn.
The listing will pave the way for large payouts to Didi’s investors including SoftBank’s Vision Fund, Uber and China’s Tencent.
SoftBank’s first Vision Fund, which counts Didi as its largest investment, would own a stake worth around $16bn at the company’s opening price. Uber’s stake, gained from an agreement in 2016 in which the US company exited its China business, would be worth around $9.6bn.
Goldman Sachs, Morgan Stanley and JPMorgan served as lead underwriters on Didi’s offering.
Additional reporting by Tabby Kinder in Hong Kong