China ride-hailing giant Didi files for US IPO
Chinese ride-hailing platform operator Didi, which has raised over $20 billion in private funding during its nine-year history and is valued at more than $60 billion, has filed to list in the US.
SoftBank Vision Fund 1 is the largest individual shareholder, having built up a 21.5% position in the company through several sizeable investments. These include participation in a $7.3 billion round – of which $4.5 billion was equity – in 2016 and contributing $5 billion out of a $5.5 billion round in 2017. The second investment valued Didi at $50 billion, up from $25 billion at the time of the first.
SoftBank initially backed the company via its balance sheet but later transferred the holdings to Vision Fund 1. Meanwhile, Vision Fund 2 has backed Didi subsidiaries involved in community group buying, bike and e-bike sharing, and autonomous driving. It committed $500 million to the latter last year.
Uber is Didi’s second-largest investor with 12.8%. Didi acquired Uber’s China business in 2016 – in between the two SoftBank investments – ending a costly battle for market share. The deal, which valued the combined Didi-Uber China operation at $35 billion, saw the parent companies receive equity stakes in one another.
Tencent Holdings is the only other investor to cross the 5% threshold requiring disclosure in the prospectus. However, Didi has a lengthy roster of backers, including Alibaba Group, Apple, China Merchants Bank, China Life Insurance, Mubadala Investment, Silver Lake, and Temasek Holdings. Company management – chiefly founders Will Cheng and Jean Liu – owns 10.5%.
Alibaba and Tencent are both investors because they previously backed Kuaidi Dache and Didi Dache, respectively. These two start-ups dominated China’s ride-hailing market in the early days before merging in 2015 (though in effect Didi acquired Kuaidi) at a valuation of $6 billion. Both Kuaidi and Didi received multiple rounds of funding prior to their unification.
Conceived on the streets of Beijing – out of the founders’ frustration at trying to find transportation in inclement weather – Didi now claims to be the world’s largest mobility technology platform. As of March, it operated in 4,000 cities, counties and towns in 15 countries, with a fleet of 15 million drivers serving 493 million annual active users. The platform facilitated 41 million average daily transactions in the 12 months ended March with gross transaction value of RMB341 billion ($53.4 billion).
Within China, the shared mobility business encompasses ride-hailing, taxi-hailing, chauffeur services, and carpooling. It had 377 million annual active users and 13 million annual active drivers as of March and facilitated an average of 25 million transactions per day in the first three months of the year. Over the same three-month period, 4.6 million average daily transactions were completed outside of China.
Didi has three other core business areas: auto solutions, which involves providing car leasing services and discounted fuel and repairs to drivers; the largest electric vehicle (EV) charging network in China, which supports one million new energy and hybrid vehicles in the Didi network; and an autonomous driving unit that sources traffic data from the shared mobility fleet and uses it to develop algorithms for technology deployed in a 100-strong autonomous vehicle fleet.
Other operations – such as e-bikes, community group buying, and intra-city freight – are intended to leverage the company’s existing knowledge and network in on-demand services.
The global mobility market was worth $6.7 trillion in 2020, but shared mobility and EV penetration were 2% and 1%, respectively. China Insights Consultancy estimates they will account for 23.6% and 29.3% of a $16.4 trillion global market by 2040. China will contribute $3.9 trillion, with shared mobility and EV penetration of 35.9% and 50.2%, respectively.
Didi posted RMB141.7 billion in revenue last year, down from RMB154.8 billion in 2019, largely due to COVID-19 sapping demand. Over the same period, its net loss widened from RMB9.7 billion to RMB10.6 billion. China mobility is responsible for over 90% of revenue. Adjusted EBITDA for this business has been positive since 2019.
In the first three months of 2021, Didi’s revenue came to RMB42.2 billion and the company posted a net income of RMB5.5 billion. Didi still lost money on operations; the positive swing was because of gains on investments, including an unrealized gain of RMB9.1 billion on the community group buying operation.
Vision Fund 1 is also an investor in Grab, a Southeast Asia-focused ride-hailing and local services platform, that has agreed to go public in the US through a merger with a special purpose acquisition company (SPAC) at an enterprise valuation of $30.4 billion. A third Asian portfolio company - Korean e-commerce player Coupang, which is one-third owned by Vision Fund 1 - completed a bumper US IPO earlier this year.
More on Greater China
Latest News
Asian GPs slow implementation of ESG policies - survey
Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...
Singapore fintech start-up LXA gets $10m seed round
New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.
India's InCred announces $60m round, claims unicorn status
Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”
Insight leads $50m round for Australia's Roller
Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.