After the announcement that DiDi’s planning an IPO, what’s next?

After the announcement that DiDi’s planning an IPO, what’s next?
Source: Florence Lo, Reuters
The company is looking to go public in the near future following the recent release of its initial public offering.

  • DiDi is a popular ride sharing company in China that offers more than just taxi services in order to stay competitive in the country.
  • The company is looking to go public in the near future following the recent release of its initial public offering.

What is DiDi?

  • DiDi, which is headquartered in Beijing, has over 550 million users and tens of millions of active drivers.
  • The company, whose name translates to “beep-beep” like a car horn, was founded in June 2012 by then 26-year-old Cheng Wei after he spent eight years working for Alibaba.
  • The company originally started out as an Uber clone, offering rides and jobs for drivers much like the popular San Francisco-based company does.
  • Only five months after it was founded, Tencent invested US$15 million in the company.
  • DiDi has consistently been considered one of the most valuable tech startups in the market and it offers a lot more than its American rival, Uber.

Are DiDi and Uber competitors?

  • At one time, the companies were rival operations in China, but that hasn’t been the case since 2016.
  • In 2016, DiDi acquired Uber China after Uber’s then-chief executive officer, Travis Kalanick, claimed the company was losing over US$1 billion annually in China.
  • Part of the deal gave Uber the opportunity to own about 15% of the company, so the former rival is now invested in the success of DiDi.

Does DiDi have any other competitors?

  • Many companies in China seem to almost be required to offer more than a single service in order to stay competitive.
  • DiDi itself offers more than just ride-sharing, allowing customers the option of automobile maintenance and financial services and even bike-sharing.
  • Meituan-Dianping is a competitor to DiDi and is currently aiming for a valuation of US$55 billion while offering a wide range of internet services such as hotel booking and food delivery.
  • “The Didi-Uber fight is purely about ride-sharing,” Ken Xu, a partner at Shanghai-based investment firm Gobi Partners said. “But Meituan is a more powerful rival because it can combine car-hailing with multiple online services to bring more user traffic.”
  • Despite its investment, Alibaba owns another competitor to DiDi, the GPS mapping company AutoNavi. AutoNavi has recently started offering ride-sharing jobs to drivers and is reportedly allowing them to take 100% of the profits.

What’s going on with DiDi’s IPO?

  • DiDi recently filed for an IPO with the intention of going public.
  • In other words, DiDi is looking to find more investors by giving the general public the opportunity to invest in the company.
  • Didi – which is backed by Tencent, Alibaba and Softbank – was most recently valued at an incredible US$62 billion following a round of fundraising in August.
  • By the time Didi goes public, experts predict that the company will be valued as high as US$100 billion, even more than Uber.

What comes next for investors and DiDi?

  • Earlier this month, American President Joe Biden announced that investors would not be able to invest in companies that have ties to the Chinese military.
  • While this doesn’t directly affect DiDi, the mounting tension between the United States and China may have negative effects on the company as it looks to go public.
  • Despite the recent bans and tensions between the US and China, DiDi’s CEO and founder Cheng Wei remains optimistic about the company’s future.
  • “We aspire to become a truly global technology company. While our business started in China, we believe we can help make life better for many more people around the world in a similar way,” said Cheng. “What we have learned and built is relevant across the globe – in Latin America, Russia, South Africa or anywhere where affordable, safe and convenient mobility is valuable.”

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