Chinese ride-hailing giant Didi Chuxing has reportedly raised over $1.5 billion in debt financing ahead of its blockbuster debut on the New York Stock Exchange.

A Reuters report states that the company has confidentially filed for a July listing with the U.S Securities and Exchange Commission (SEC) with Morgan Stanley and Goldman Sachs acting as the lead bookrunners for the deal. Didi’s estimated $100 billion valuation would make it one of the biggest IPOs to list at the NYSE this year and the biggest Chinese IPO in the country since Alibaba’s 2014 debut. Didi Chuxing is backed by SoftBank, the multinational finance conglomerate behind South-East Asian commerce giants such as Alibaba and Coupang. Didi was most recently valued at over $62 billion at a financing round last August.

The company had previously considered the option of listing via a SPAC merger but decided against it as it was not viable given its valuation target. Didi currently aims to sell about 10% of its shares in order to raise $10 billion that it would use to expand across Asia and further strengthen its network in China. It has also been planning to simultaneously list on the Hong Kong Stock Exchange in order to maintain its tight grip over the Chinese markets. However, the Hong Kong IPO would warrant tighter scrutiny over Didi’s business practices such as using unlicensed vehicles and hiring part-time drivers. Shanghai authorities had previously fined Didi for these discrepancies multiple times in 2019.

About Didi Chuxing and the industry

Didi Chuxing is a Beijing based vehicle for hire and ride hailing company that currently hires over ten million full and part time drivers all over China. Owing to its growing network across China and other neighbouring countries, Didi made a staggering $1 billion in profits in 2020. These figures are especially impressive when compared to the company’s American counterpart Uber, whose Q3 reports showed losses of over $1.1 billion. Didi is currently looking to expand into sectors of strategic importance like autonomous driving and AI based chips.

The company will have stern competition at the NYSE in the form of its Singapore based competitor, Grab which recently announced its plans to list on the NASDAQ via a SPAC merger. The SPAC is set to value Grab at a staggering $39.6 billion, making it the biggest blank-check merger to date. Grab has reportedly attracted backing from T. Rowe Price Group Inc. and Temasek Holdings Pte for its planned merger with Altimeter Growth. As part of the deal, the company will receive about $4.5 billion in cash, including $4 billion in private investment in a public equity arrangement. Coupled with local rivals like Uber and Lyft, which despite incurring losses still maintain a strong hold over American markets, Grab and Didi’s listings will make the ride-hailing space an incredibly cut-throat one.

In Sum

Despite the heightened tension between the world’s two greatest economies, Chinese companies have found incredible momentum in American markets over the past few years. Last year, Chinese companies raised over $12 billion in U.S. listings, more than triple the fundraising amount in 2019. Didi was valued at over $57 billion in the country in 2017. The figure later exceeded $60 billion as major investors like Softbank came on board. South-East Asian companies in general have found great success on Wall Street in recent years. E-commerce giants like Alibaba and Coupang have debuted their multi-billion dollar IPOs in the country over the last decade. This intensive financial activity is a clear sign of investor confidence in these seasoned companies who have successfully captured tricky South East Asian markets and even established a virtual monopoly, in some cases.

With most of these companies looking to use the raised funds to expand across the U.S, it would be safe to assume that we are about to enter an extremely fruitful decade for Asian tech based companies in America. The onus will now be on local companies to retain their customers and expand their businesses against fierce external competition.

About the Author: Akshat Biyani

Akshat Biyani is a contributing Features Writer, with extensive expertise in Business, Finance and Technology.