Cheng Wei, the co-founder of Chinese ride-hailing giant Didi, is poised to shoot up the ranks of the super-wealthy when his firm lists shares in the U.S.
The company filed last week for an initial public offering under the business name Xiaoju Kuaizhi Inc., revealing that the Chinese entrepreneur has a 7% stake. With Didi reportedly trading at a valuation of about $95 billion in the secondary market in recent months, that shareholding could be worth as much as $6.7 billion, according to the Bloomberg Billionaires Index.
Jean Liu, a co-founder and Didi’s president, owns a 1.7% slice that could be worth $1.6 billion. Eight other executives collectively hold about 1.8% of the company, which translates to a total $1.7 billion hoard.
It’s the latest example of ride-hailing riches being minted in Asia as companies backed by Masayoshi Son’s SoftBank Group Corp. prepare to go public. Singapore-based Grab Holdings Inc. is poised to merge with a special purpose acquisition company, while Indonesia’s GoTo Group is pursuing a listing by the end of the year.
“Ride mobility is one of the most significant growth industries in Asia,” said Gary Dugan, chief executive officer of the Global CIO Office in Singapore. The scale of the Didi IPO “shows just how much economic value continues to be created.”
A representative for Didi didn’t respond to a request for comment.
Didi is counting on a remarkable post-pandemic recovery that accelerated after China’s became the world’s first major economy to emerge from Covid-19. People returning to work and a resumption of travel helped revenue more than double to 42.2 billion yuan ($6.6 billion) in the first quarter, reversing a decline in 2020. It’s one of the largest Chinese internet giants to tap public markets in recent years, part of a second wave of tech stars aspiring to join Alibaba Group Holding Ltd. and Tencent Holdings Ltd. in the upper echelons of the country’s industry.
With more than 493 million annual active users mostly in China, the startup earlier raised funding at a $62 billion value and has been considering seeking a valuation of as much as $70 billion to $100 billion in the IPO, Bloomberg News has reported.
But wary investors remember the roller-coaster ride of past years and point to Beijing’s tightening grip on internet giants including Tencent—a major Didi backer—as a potential red flag. In its risk factors, Didi warned about the possibility of a regulatory clampdown.
“Didi doesn’t have a solid foundation to support a valuation of $100 billion,” said Shen Meng, a director at Beijing-based boutique investment bank Chanson & Co. “The company’s growth has plateaued, while expanding overseas is no easy matter.”
The startup founded by ex-Alibaba staffer Cheng came out on top in 2016 when it drove Uber Technologies Inc. out of China, after which it briefly dominated ride-hailing across the country. But its fortunes took a turn for the worse in 2018 when a pair of murders committed by drivers spurred an investigation into its ability to police a vast network used by hundreds of millions. The subsequent crackdown chilled investors and Didi’s shares traded at a 40% discount to its last valuation just before the pandemic erupted and hurt its business.
Although Didi has expanded beyond ride-hailing in recent months to include new offerings such as on-demand trucking and online commerce, “those services won’t be the same,” Shen said.