HONG KONG • Mr Cheng Wei, the co-founder of Chinese ride-hailing giant Didi, is poised to shoot up the ranks of the super-wealthy when his company gets listed in the United States.
The firm, which goes under the business name Xiaoju Kuaizhi, has revealed that the Chinese entrepreneur has a 7 per cent stake.
With Didi reportedly trading at a valuation of about US$95 billion (S$127.3 billion) in the secondary market in recent months, that shareholding could be worth as much as US$6.7 billion, according to the Bloomberg Billionaires Index.
Ms Jean Liu, a co-founder and Didi's president, owns a 1.7 per cent slice that could be worth US$1.6 billion. Eight other executives collectively hold about 1.8 per cent of the company, which translates to US$1.7 billion.
It is the latest example of ride-hailing riches being minted in Asia as companies backed by Mr Masayoshi Son's SoftBank Group, including Singapore-based Grab Holdings and Indonesia's GoTo Group, prepare to go public.
"Ride mobility is one of the most significant growth industries in Asia," said Mr Gary Dugan, chief executive of asset management firm Global CIO Office in Singapore. The scale of the Didi initial public offering (IPO) "shows just how much economic value continues to be created".
A representative for Didi did not respond to a request for comment.
Didi is counting on a remarkable post-pandemic recovery that accelerated after China 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 (S$8.8 billion) in the first quarter, reversing a decline last year.
It is 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 and Tencent Holdings in the upper echelons of the country's industry.
With more than 493 million annual active users, mostly in China, the start-up earlier raised funding at a US$62 billion value and has been considering seeking a valuation of as much as US$70 billion to US$100 billion in the IPO.
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 US$100 billion," said Mr 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 start-up founded by former Alibaba employee Cheng came out on top in 2016, when it drove Uber out and then briefly dominated ride-hailing across China.
But its fortunes took a turn for the worse in 2018, when a pair of murders committed by its drivers led to a probe into its ability to police its vast network. The subsequent crackdown chilled investors and Didi's shares traded at a 40 per cent discount to its last valuation just before the pandemic erupted and hurt its business.
Although it 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", Mr Shen said.
The regulatory risks facing Didi loom large.
It was among 34 Chinese tech firms ordered by regulators in April to rectify their anti-competitive practices, and Chinese antitrust watchdogs have also started reviewing previous investments conducted by Internet companies.
Still, one thing Didi has in its favour is scarcity value.
Investors have warmed to Uber since its initial flop in public markets, with its shares more than tripling from a low in March last year through the end of last week. There is no other listed ride-hailing giant of similar scale, but at least one may compete with Didi for investor attention soon.
Grab, the ride-hailing and food-delivery giant led by Mr Anthony Tan, plans to list in the US through a merger with Altimeter Growth Corp in the fourth quarter that may value the combined entity at about US$40 billion.
Co-founder and chief executive Tan will see his fortune surge to US$829 million based on the stock that he will own, according to the Bloomberg Billionaires Index.
Then there is GoTo, created from the merger of ride-hailing and payments start-up Gojek and e-commerce company Tokopedia in Indonesia. It also intends to list by the year end. The two companies had a combined value of about US$18 billion during merger talks.
That means Gojek co-founder Nadiem Makarim is sitting on a fortune of about US$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 US$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 per cent of Didi, 21.7 per cent of Grab and about 15 per cent of GoTo. Didi is by far the largest of the trio, and the single biggest investment in SoftBank's portfolio.
In a founders' letter in the filing, Mr Cheng, 38, who started Didi in 2012, talked about its potential not just in its core mobility business, but also in newer fields.
It 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, 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," Mr Cheng and Ms 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 allow us to create a platform that better addresses people's daily essential needs."
BLOOMBERG
