China’s Didi in Talks for IPO

Chinese ride-hailing company Didi Chuxing is in talks for a multi-billion-dollar initial public offering that could take place as early as this year, The Wall Street Journal reported on Tuesday, citing people familiar with the matter. The company is hoping to fetch a valuation of at least $70 billion to $80 billion if it goes public and has been in talks with bankers in recent weeks over the feasibility of raising cash through an IPO in the second half of 2018, the Journal said.

Didi said Tuesday that it was expanding its service to Mexico, a move that pits the company directly against Uber. Didi has also said it wants to enter Taiwan. The company has previously partnered with international rivals to expand its reach to markets beyond China. But its move into Mexico marks the first instance of a direct expansion outside of its home market. Didi Chuxing bought Uber’s business in China in 2016. Uber has been planning its own IPO, but CEO Dara Khosrowshani has said this will likely not take place until 2019.

Separately on Tuesday, Didi executives said they were considering developing a smartcar customized for ride-sharing and is seeking auto makers that could manufacture the vehicle. The car is anticipated to be an electric vehicle and would be connected to the internet, allowing Didi to monitor data from the car for safety by applying artificial intelligence technology. 

Initiatives like Didi’s plans are prompting auto makers to reconsider their relationship with ride-sharing companies. Car makers have long seen ride-hailing firms as competitors but are increasingly having to find ways to work with them as their presence grows. Didi’s plans show how tech companies are trying to provide the software that runs cars’ core functions, which could relegate auto makers to mere hardware manufacturers.

To contend with rising competition and defend its market position, Didi is considering other capital-raising options, including the sale of convertible bonds, according to people familiar with its strategy. Such bonds could be structured to pay investors interest initially and could later convert into shares in the company at the time of, or after, its public listing.

 

Keep those stops tight

Todd “Bubba” Horwitz