The regulatory risks facing Didi loom large. The company was among 34 Chinese tech firms ordered by regulators in April to rectify their anti-competitive practices, and Chinese antitrust watchdogs have also begun reviewing previous investments conducted by Internet companies which—by and large—have escaped government oversight until now.
Still, one thing Didi has in its favor is scarcity value. Investors have warmed to Uber since its initial flop in public markets, with U.S. ride-hailing giant’s shares more than tripling from a low in March 2020 through the end of last week. There’s no other listed ride-hailing giant of similar scale, but at least one may compete with Didi for investor attention in coming months.
Grab, the ride-hailing and food-delivery giant led by Anthony Tan, plans to list in the U.S. through a merger with Altimeter Growth Corp. in the fourth quarter that may value the combined entity at about $40 billion. Co-founder and CEO Tan will see his fortune surge to $829 million based on the stock that he will own, according to the Bloomberg Billionaires Index.
Shares held by co-founder Hooi Ling Tan and President Ming Maa will be worth $256 million and $144 million, respectively.
Then there’s GoTo, created from the merger of ride-hailing and payments startup Gojek and e-commerce company PT Tokopedia in Indonesia. It also intends to list by the end of the year. The two companies had a combined value of about $18 billion during their merger talks. That means Gojek co-founder Nadiem Makarim is sitting on a fortune of about $327 million, according to calculations by Bloomberg based on the company’s regulatory filing.
Tokopedia co-founders William Tanuwijaya and Leontinus Alpha Edison have a combined wealth of about $510 million, the calculations showed. GoTo declined to comment.
One common element for all the firms is the backing of SoftBank. The Japanese company owns 21.5% of Didi, 21.7% of Grab and about 15% of GoTo. Didi is by far the largest of the Asian trio, and the single biggest investment in SoftBank’s portfolio.
“SoftBank could reap a $6 billion to $10 billion profit from its Vision Fund’s 21.5% stake in Didi, we calculate, should the Chinese ride-hailing company list shares at the top end of a reported $70-$100 billion valuation range,” said Bloomberg analyst Anthea Lai. “This could more than offset SoftBank’s losses from the bankrupt Greensill Capital and Katerra. Didi’s swing to $858 million net profit in the March quarter may mark the start of its post-pandemic recovery.”
In a founders’ letter in the filing, the 38-year-old Cheng, who started Didi in 2012, talked about Didi’s potential not just in its core mobility business, but in newer fields.
The company is looking for capital to expand into online commerce and bankroll a major foray into Europe, where it must compete with Uber. Didi, which remains the dominant player in China despite competition from the likes of Dida Inc., is also looking to leverage that lead to expand into adjacent arenas from autonomous driving to electric vehicles.
“We aspire to become a truly global technology company,” Cheng and Liu wrote. “We have also been launching businesses that fit well with our technological and operational experience and advantage at building marketplaces that improve the lives of urban inhabitants. These include intra-city freight, community group buying and food delivery. These businesses, while still nascent, allow us to create a platform that better addresses people’s daily essential needs.”
This article was provided by Bloomberg News.