DiDi IPO: Everything you need to know about Didi

As one of the most heavily-backed companies in the world, Chinese taxi-hailing app DiDi is sure to interest stock traders after its high-profile listing. Here’s everything you should know about the business post IPO.

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What do we know about the DiDi IPO?

DiDi's IPO on June 30 2021 raised $4.4 billion at $14 a share, which meant a valuation of $73 billion.

Following the listing, the company is expected to put the cash towards global expansion and technological investment in EV and solutions aimed at autonomous driving.

Check out more IPOs for 2021.

What does DiDi do?

DiDi Chuxing is a Beijing-based vehicle for hire company. It enables its customers to hail taxis and private cars as well as providing social ride sharing, bike sharing, and deliveries. Additionally, DiDi offers automobile services such as electric vehicle charging and car leasing.

DiDi Dache, as it was originally known, was founded in 2012 by Alibaba salesman Cheng Wei and simply offered a ride-hailing service. It initially grew its market visibility with the assistance of a $15 million investment by Chinese tech giant Tencent.

In the following years, DiDi would raise funding in excess of $23 billion from the likes of Goldman Sachs, JP Morgan and SoftBank as well as a $2.5 billion syndicated loan from China Merchants Bank Co, one of the largest contributions ever from a single financier. The funding enabled DiDi to establish a presence in 400 cities across 15 countries and growing, with more than 490 million global users and 2020 revenues of $21.6 billion.

This compares to 2020 revenues of $11.1 billion for Uber, although the US company’s service is available in more territories (10,000 cities across 71 countries) as of June 2021.

In 2015 DiDi Dache merged with Chinese rival Kuaidi Dache, and in 2016, DiDi also acquired Uber China, valuing the US company’s Chinese arm at $35 billion. Since then, DiDi has made further investments in Uber as well as other ride-hailing services including Lyft of the US, the Indian app Ola and the Singaporean service Grab.

How does DiDi make money?

DiDi makes money mostly through fares generated through its ride-hailing app, where the company gets a percentage of every fare (ranging from 5% to 20%). However, it also attracts revenue from other avenues such as its delivery service, through which customers can send and receive parcels delivered by DiDi drivers.

Another service offered by DiDi is its electric vehicle charging network; the company partnered with BP in 2019 to provide charging services to both DiDi and non-DiDi car owners. DiDi announced a plan for a car leasing service in 2020.

What is DiDi's business strategy?

DiDi’s three-year business strategy, announced in April 2020, includes a series of goals based on passenger journeys, active users and market penetration rate. By 2022, the goal is to complete more than 100 million daily trips and serve 800 million active users per month, as well as achieve an 8% penetration rate in China’s mobility market.

However, the business is also putting a strategic focus on passenger safety, in the wake of two female passengers being murdered by DiDi drivers in 2018, and the surrounding negative press. Furthermore, the company is keen to develop in areas of operational efficiency, user experience, public communication and regulatory collaboration.

In 2020, DiDi expanded into Russia, marking the first time the company had offered its services in Europe.  

Is DiDi profitable?

DiDi is reportedly newly profitable after having lost billions in recent years, including a reported $1.6 billion loss in 2018. In 2020 its fortunes turned around, with the company boasting a net profit of around $1 billion despite coronavirus lockdowns that brought China and most of the world to its knees.

As with other ride-hailing services, a balance has to be struck between charging enough per ride to retain drivers and be profitable, but not too much to lose custom to rivals.

How much is DiDi worth?

DiDi is worth around $73 billion based on its 2021 IPO, as outlined above. The August 2020 funding round had previously valued the company at $62 billion.

Who owns DiDi?

DiDi’s ownership is split between a variety of shareholders, composed of a range of international finance institutions including the SoftBank Vision Fund with around 21.5% ownership as of June 2021, and other enterprises. Uber retains a stake of almost 14% and Tencent around 7%.

Board of directors of DiDi

DiDi has a number of key personnel that have helped progress the company to its expected IPO valuation. Here are some of them.

Position

Name

Co-founder and CEO

Wei Cheng

Co-founder and CTO

Bo Zhang

Senior Vice President

Wensong Zhang

Vice President

Fengmin Gong

Head of International Strategy

Li Zijian

Vice President, Strategic Development

Stephen Zhu


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