China’s Didi Chuxing is in the early stages of preparation for an initial public offering in Hong Kong, three sources close to the matter told TechNode on Wednesday, confirming reports in Chinese media.

Why it matters: Didi is the latest Chinese tech behemoth to push ahead with a multi-billion dollar initial or secondary listing in Hong Kong since Alibaba started the trend in with a November 2019 secondary listing. Chinese companies increasingly favor the Hong Kong markets, due in part to the increasingly strained relationship between China and the US.

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Details: Didi is seeking to hire investment banks to advise on a potential IPO in Hong Kong, said people familiar with the matter. They added that changes could occur in details of the plan, since deliberations are at an early stage. TechNode’s sources did not comment on the company’s valuation.

  • A company spokesman on Wednesday told TechNode that an IPO was not the company’s “top priority,” and that it did not have such plans for the moment.
  • News first broke on Monday that Didi was seeking a public listing at a target valuation of up to HKD 600 billion ($80 billion) in the Hong Kong stock market, according to a Chinese media report.
  • On Tuesday, Caixin also reported (in Chinese) that Didi was proceeding a Hong Kong listing plan, adding that institutional investors had requested a chance to exit through an IPO.
  • Caixin cast doubt upon the $80 billion figure, writing that the company is currently valued at around $56 billion. Citing an early investor in the company, Caixin wrote that recent harsh regulatory scrutiny from the Chinese authorities will make the $80 billion figure unlikely.

Context: After a difficult year, during which its business was hit first by public outrage over two customers murdered by Didi drivers, and then by the global Covid-19 outbreak, Didi is now looking to make up for losses in core businesses while diversifying its revenue in a bid to boost its valuation.

  • Didi has been piloting a home delivery business in over 20 domestic cities since March, but is reportedly (in Chinese) struggling to take market share from industry giants such as Meituan and JD.
  • The Chinese ride-hailing giant is also pushing into the freight logistics industry with the launch of a pilot service in the eastern city of Hangzhou and Chengdu, the capital of southwestern Sichuan province, late last month.
  • Around 8,000 van drivers were recruited for the freight service, and more than 10,000 orders were secured, in its first day of operation, the company said.
  • Speaking on a Bloomberg TV show in April, Didi president Jean Liu said the company has no “specific IPO timetable.”

Correction: An earlier version of this article incorrectly quoted comments by Didi President Jean Liu from an interview with Bloomberg.

Jill Shen

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen