China’s Didi Opts For New York over Hong Kong for IPO

China's Didi Opts For New York over Hong Kong for IPO

China’s top ride-hailing firm Didi Chuxing, eyes a minimum valuation of $100 billion as it leans towards New York over Hong Kong for its initial public offering (IPO)

Didi Chuxing, one of the leading ride-hailing companies in China is reportedly leaning toward picking New York over Hong Kong as the firm prepares for its initial public offering (IPO). In a related development, Didi Chuxing is reported to be eyeing a valuation of at least US$100 billion via the float, as reported to Reuters by two sources with direct knowledge of the issue.

Didi is also reported to have discussed the option of listing via a special-purpose acquisition company (SPAC), multiple sources said, referring to a blank-check firm with capital raised in a US IPO to eventually merge with a target. However, the sources report that the SPAC is considered by Didi as less viable considering its valuation target.

Another person close to Didi Chuxing revealed that the company is also looking at a second listing in Hong Kong if its US IPO is successful.

The Beijing-based Didi, which is backed by technology investment giants SoftBank, Alibaba and Tencent, has publicly stated that it has no definite plan regarding its listing destination or timeline.

People who are close to the company recently made some revelations to Reuters on condition of anonymity as the matter remains confidential. According to them, the choice of New York as a listing venue is a part reflection of concerns that a Hong Kong IPO application could run into tighter regulatory scrutiny, especially considering the company’s use of unlicensed vehicles and part-time drivers.

Didi Chuxing has come under the hammer of regulatory bodies in recent times for using unlicensed vehicles multiple times in 2019. However, the company responded with the launch of a campaign to improve safety for passengers.

The New York IPO will be particularly beneficial to the company as it is a more predictable listing place and a deeper pool of capital as soon as the second quarter begins, according to a source, referring to the momentum now lifting US stock markets.

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