Didi Chuxing Gunning For $70 Billion IPO Valuation

The Uber of China, quite literally, Didi Chuxing, could fetch a valuation of over $70 billion as per a WSJ story. Didi could raise 8-10 percent of the valuation via the IPO to invest further in its technology platform and expand beyond the Chinese market where it merged with Uber. Earlier in April, it has raised $500 million in debt from various banks. 

Didi overthrew Uber in China where it engaged in a price war which the silicon valley unicorn couldn't sustain. Uber merged its china unit with Didi Chuxing for a take in the company instead. 

Didi reported last year that its revenue had declined by 8.4 percent year on year due to the pandemic and ensuing travel restrictions. This is in line with what's happened globally with all ride-sharing platforms. 

In the first quarter of 2021, Didi rebounded with $30 million in profit however it still has posted a net loss of $1.63 billion in 2020. It also lost money both in 2018 and 2019, so profitability will be key for the ride-sharing giant. 

The problem for Didi has been that the value of transactions has dropped in 2020 and even though the rebound has happened, the pandemic is still not past us. The good news is that its core market of China has coped well with the pandemic and is leading the charge with more than half its population vaccinated.

The car has a fruit of collaboration between Didi Chuxing and BYD for ride sharing 

Softbank has held a 21.5 percent stake in the ride-sharing company while Uber which is also backed by Softbank has a 12.8 percent stake. Former Alibaba executive and founder of Didi Cheng Wei has a 7 percent stake but has 15.4 percent of the voting power. 

Didi has some greener pastures ahead as the Chinese ride-sharing market has been estimated at $99.5 billion by 2023, representing a doubling of the market from what it was before the pandemic. It also has diversified its business with a logistics service allowing users to book vans with drivers to transport goods across the main cities in China. 

Expanding to more markets will be critical as it faces stern action from the Chinese regulators for alleged monopolistic practices. Didi Chuxing was amongst the companies that were summoned by the regulators in China, alongside nine other mobility combines. 

Didi has also been focusing on the development of electric vehicles and autonomous driving technology. It has a partnership with Guangzhou Automobile Industry Group for self-driving cars which have been in development since 2016. It also has developed a car with BYD custom-made for ride-sharing.  It also launched a robotaxi service last year, so it is working on a lot of things.