China's Ride Hailing Giant Didi Prioritizes $100B US IPO To Avoid Chinese Regulatory Scrutiny: Reuters

SoftBank Group Corp SFTBY SFTBF-backed Chinese ride-hailing firm, Didi Chuxing, seeks a New York initial public offering (IPO) by the second quarter over Hong Kong, targeting at least $100 billion in valuation via the float, Reuters reports.

• The company wants to avoid Hong Kong’s tighter regulatory scrutiny over business practices, including the use of unlicensed vehicles and part-time drivers. Shanghai authorities fined Didi for using unlicensed cars multiple times in 2019. Didi responded by launching a campaign on passenger safety.
• New York IPO offered a more predictable listing pace and a deeper pool of capital.
• A special-purpose acquisition company (SPAC) listing was less viable to Didi considering its target valuation figure.
• Didi could raise close to $10 billion if it sold 10% of its shares at the target valuation, preceded by Alibaba Group Holding Ltd’s BABA float worth $25 billion in 2014.
• Didi was also contemplating on a Hong Kong listing after the U.S. listing.
• Last year, Chinese companies raised $12 billion in U.S. listings, over three times the 2019 fundraising amount.
• Nine-year-old Didi was valued at $56 billion in a 2017 fundraising. The valuation exceeded $60 billion in 2018. However, some of its shares had been sold at a valuation below $50 billion before the Chinese New Year last month in private trades, as per Reuters.
• Didi was also considering a share buyback from existing shareholders and company executives at a valuation of $80 billion before the IPO.