Chinese ride-hailing startup Dida Chuxing has turned in its prospectus to Hong Kong Exchanges, aiming to be listed ahead of its rival Didi Chuxing, as Haitong International Capital Ltd., and Nomura International (Hong Kong) Ltd., will co-sponsor the deal, China Business Network (CBN) reported.
The prospectus shows Dida's business mainly comprises carpooling, smart taxi and advertisement. This move brings Dida to be the first company listed in the shared mobility business.
A Niche Market
Established in 2014, Beijing-based Dida Chuxing, formerly called "Dida Pinche", specializes in taxi-hailing and carpooling. It operates a network of 1.2 million taxi drivers and 19.2 million registered private car owners. About 36.7 million people have used this app in 366 cities across China as of June 30.
According to a Frost & Sullivan report, Dida was the largest carpooling provider in China in terms of the number of carpooling rides in 2019, with a market share of 66.5%. It places the second in the taxi-hailing market behind Didi Chuxing.
Carpooling service, the core business of Dida, generated 8.5 billion yuan ($1.27 billion) in gross transaction value in 2019, accounting for 77.3% of the entire business on the platform, an exponentially rapid development from a GTV of 700 million yuan in 2017.
The company said it has started to see positive earnings performance since 2019. The adjusted net profit was said to be 172.4 million yuan in 2019 and 150.8 million yuan in the first-half of 2020.
Big-Name Back-ups
In January, Dida raised between $250 million to $300 million in a pre-IPO round from a wide range of investors and was considering an initial public offering. Dida mulled floating on exchanges in mainland China or Hong Kong, but latter won out, people familiar with the matter told Bloomberg at that time.
NIO Capital, IDG Captial, China Renaissance Capital Investment, Biauto, HillHouse Capital, JD.com, and Trip.com Group hold Dida's shares of 21.6%, 10.23%、7.15%、4.95%、4.14%、4.14% and 2.86%, respectively, the prospectus shows.
As the investment arm of Chinese electric vehicle startup NIO Inc., NIO Capital this January closed its debut USD-denominated fund at over $200 million to support early and middle stage companies in the automobile, energy and logistics field. In August, it launched cooperation with Dida - which lead more NIO car owners to join Dida's platform.
According to iiMedia Research, each day there are 700 million unoccupied auto seats on the road in the country. Dida CEO Song Zhongjie said it aims reach the goal of bringing 70 million unoccupied seats to the carpooling business in the next two to three years.
Undermining Risks
In August of 2018, a woman passenger was murdered by her driver on a carpooling service offered by competitor Didi Chuxing. Dida's popularity grew afterwards as many users shifted to new platforms.
Analysts told CBN that even though the carpooling business has seen positive development, as a public transport tool, it's likely to face a future hit by government policy.
China's current laws and regulations are only applied to online ride-hailing services, but not to carpooling business. Dida said it is aware that the regulators will raise their supervision bars on the carpooling business industry, which would cause Dida "a large amount of compliance cost."
The prospectus also indicates an online payment issue. Without owning a certified payment license, it processes the payments as a non-financial institute.
