Chinese ride hailing company DiDi announced on March 19th that the company will raise $1.5 billion in funding using asset-backed securities (ABS), after getting approval from the Shanghai Stock Exchange. ABS is a financial security collateralized by a pool of assets such as loans, leases, credit card debt, royalties or receivables.
This enables DiDi to help partner leasing enterprises raise funds through securitizing their stock assets. Upon completion of the issuance, DiDi’s partner leasing companies will acquire new funding channels and help strengthen general transportation capacities.
Based on DiDi’s business verticals, the program is collateralized by the leasing claims by car leasing enterprises when leasing cars to drivers. DiDi acts as a proxy of the originators, responsible for the coordination of leasing companies, and issues bonds through bundling the underlying assets to the capital market.
The scale of the planned initial issuing is RMB 300 million. The raised funds will be used for new vehicle procurement by the leasing enterprises in order to expand the transportation capacity of DiDi’s platform.
Didi said that its program for an RMB 10 billion ($1.5 billion) shelf offering of a supply chain finance asset-backed security product received a no-objection letter from the Shanghai Stock Exchange (SSE).
DiDi currently has more than 21 million drivers, 450 million passengers, car leasing companies and automobile dealers, delivering more than 25 million rides on a daily basis.
“Using financial tools to serve the physical economy and incorporating modern finance into the industrial system are the general trend of the economic development,” said SSE in a statement, adding, “the issuing of the new transportation supply chain ABS is a key step by the SSE to urge the supply chain finance to serve the physical economy under the leadership of the China Securities Regulatory Commission.”