Monday, July 26, 2021

Chinese ride-hailing giant Didi facing probe ahead of US market listing

In recent months, Beijing has been clamping down on the country's internet giants for wielding too much power.

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China’s market watchdog is investigating ride-hailing giant Didi Chuxing to see if has been unfairly squeezing out smaller rivals.

This comes as Didi readies for what could be this year’s biggest US market debut.

The State Administration for Market Regulation (SAMR) is also examining whether the pricing mechanism used by Didi’s core ride-hailing business is transparent enough, said Reuters quoting people familiar with the matter.

Last week, Didi filed papers to list its shares in the US, in what could be the biggest initial public offering this year.

Didi is backed by some of Asia’s largest technology investment firms, including Softbank, Alibaba and Tencent.

The number of shares to be offered and the pricing has not yet been revealed. However, the company could raise around US$10 billion and seek a valuation of close to US$100 billion, according to reports.

That would make it the biggest share offering in the US by a Chinese company since 2014, when e-commerce giant Alibaba raised US$25 billion.

Didi claims it is the world’s largest mobility-technology platform, operates in 15 countries and counts over 493 million annual active users globally.

It reached its dominant position in the online ride-hailing business in China after long subsidy wars with Alibaba-backed Kuaidi and American Uber’s China arm. Both have now merged into Didi after investors grew tired of burning cash and started demanding profits.

As well as ride-sharing, Didi operates different businesses involved in mobility, including electric vehicle charging networks, fleet management, car manufacturing and autonomous driving.

In recent months Chinese authorities have been clamping down on the country’s internet giants, including Alibaba and Tencent, which Beijing sees as wielding too much power.

Earlier this year, regulators set their sights on technology giant Alibaba and its former chairman Jack Ma.

In April, SAMR fined that firm a record US$2.75 billion, saying it had abused its market position for years.

Ma had been set to become China’s richest man yet again following the dual stock market debut of his digital payments company Ant Group – an affiliate of Alibaba – in Hong Kong and Shanghai, which was worth about US$34.4 billion.

What was meant to be the world’s biggest initial public offering was halted at the last minute and the prospects for the plan remain unclear.

As for the Didi deal, “We do not comment on unsubstantiated speculation from unnamed sources,” a Didi spokesman told the BBC.

SAMR has not yet responded to requests for comment from the BBC.

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