China's Didi leans towards New York for IPO, eyes valuation of at least $100 billion
HONG KONG - China's top ride-hailing firm Didi Chuxing is leaning toward picking New York over Hong Kong for its initial public offering (IPO), eyeing a valuation of at least $100 billion via the float, two people with direct knowledge of the matter said.
Didi has also discussed the option of listing via a
special-purpose acquisition company (SPAC), multiple sources told Reuters, which
would involve merging with a blank-check firm that raises capital through a
U.S. IPO.
But they said the SPAC option was seen by Didi as less
viable given its valuation target.
At that valuation target, Didi could raise about $10 billion
if it sells 10% of its shares, in what would be the biggest Chinese IPO in the
United States since Alibaba's $25 billion float in 2014.
A fifth person close to Didi said the company is also
considering a second listing in Hong Kong if its U.S. IPO takes place.
Beijing-based Didi said it doesn't have a definite plan
regarding its listing destination or timeline.
The sources declined to be identified as the information is
confidential.
Two of them said the preference for New York as a listing
venue partly reflects concerns that a Hong Kong IPO application could run into
tighter regulatory scrutiny over Didi's business practices, including the use
of unlicensed vehicles and part-time drivers.
Shanghai authorities fined Didi for using unlicensed
vehicles multiple times in 2019. Back then, Didi responded by launching a
campaign to improve safety for passengers.
Another advantage Didi sees in a New York IPO is a more
predictable listing pace and a deeper pool of capital, a sixth source said,
adding that the IPO could happen as soon as the second quarter.
Hong Kong stock exchange operator HKEX declined to comment
on the possibility of a Didi listing on its platform.
In a sign of challenges for ride-hailing firms to list in
Hong Kong, Didi's smaller domestic rival Dida Inc filed for an IPO in the city
last October and has been fielding several queries from the exchange, said a
seventh source.
The queries were mainly linked to matters including business
compliance and the company has yet to clear a hearing with the bourse, said the
person with knowledge of the matter.
Dida and HKEX declined to comment.
Didi's planned listing in the United States will add to the
strong momentum of Chinese companies tapping investors in that market in the
last couple of years despite heightened tensions between the world's
two-largest economies.
Last year, Chinese companies raised $12 billion in U.S.
listings, more than triple the fundraising amount in 2019, according to
Refinitiv data.
However, some of its shares had been sold at a valuation
below $50 billion before the Chinese New Year last month in private trades, one
of the first two people and an eighth source said.
Didi is also considering buying back some shares from
existing shareholders and company executives at a valuation of $80 billion
prior to the IPO, said one of the people.
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