Didi Accelerates IPO Plans, Targeting Valuation Above $62 Billion USD

Featured stories this week include: The Asian Development Bank (ADB) has secured $300 million USD in funding from the Green Climate Fund (GCF) climate-resilient and environmentally sustainable economic recovery in South-east Asia; Indonesia’s Xendit incorporates infrastructure into integral aspect of business model; and PayMongo Co-Founder Luis Sia outlines the plethora of opportunities now available to Filipino entrepreneurs going into e-commerce.

Didi Accelerates IPO Plans, Targeting Valuation Above $62 Billion USD

Chinese ride-hailing giant Didi Chuxing Technology Co. is accelerating plans for an initial public offering to as early as next quarter to capitalize on a post-pandemic turnaround.

Bloomberg reports that Didi, the largest investment in SoftBank Group Corp.’s portfolio, is targeting a valuation above the $62 billion it secured during its last funding round. The company accelerated plans from a previous target of late 2021 after its car-hailing business bounced back with China’s success in curbing the spread of COVID-19.

Although the company hasn’t made a final decision on the listing location, based on a common 15% float for mega IPOs in Hong Kong (one potential venue), Didi could raise roughly $9 billion in what would be one of the largest tech debuts globally in 2021. Didi’s plans remain preliminary and the timing could still slip till later in the year, depending on negotiations.

Last year, Didi President Jean Liu said the company’s core business had already begun making small profits. Daily rides and revenue have surpassed pre-pandemic levels and are now at record high.

“Didi doesn’t comment on market speculation and doesn’t have a definite IPO plan or timeline,” the company said in a statement.

The company is looking for capital to expand into online commerce and expand into Europe, where it must compete with Uber Technologies Inc. Didi, which remains the dominant player in China despite competition from the likes of Dida Inc. (which filed for a Hong Kong listing last year) is also looking to leverage its lead to expand into adjacent arenas from autonomous driving to electric vehicles.

“The barely profitable company thinks that a market sensing the end of Covid is supportive, but there may be red flags” in its costly overseas and business expansions, Brock Silvers, Chief Investment Officer at Hong Kong-based private equity fund Kaiyuan Capital, explained.

Didi’s stock is trading in the secondary market at about $43 to $49 per share currently, just below the $51 that SoftBank bought in at before the government probe. Backed by Tencent Holdings Ltd., Didi now operates in 14 countries outside its home base, mostly in Latin America.

Asian Development Bank Secures $300M Funding for 'Green Recovery' Projects

The Asian Development Bank (ADB) has secured $300 million USD in funding from the Green Climate Fund (GCF) climate-resilient and environmentally sustainable economic recovery in Southeast Asia.

The GCF is a global fund created to help developing countries address the challenge of climate change. ADB has received 12 funding approvals totaling $948 million USD since becoming an accredited GCF entity in 2015.

The Business Times reports that the funds secured will go towards ASEAN Catalytic Green Recovery Program (ACGF), which aims to catalyse financing from development partners and private capital sources to fund green infrastructure projects worth more than $4 billion USD across the region.

ADB will prioritize the use of GCF funding under the program for investment projects in Cambodia, Indonesia, Laos and the Philippines.

Over a 30-year period, projects are expected to reduce carbon dioxide emissions by 119 million tonnes and create 340,000 green jobs in sectors such as sustainable transport, renewable energy and energy efficiency systems, low-carbon agriculture and natural resources.

ACGF looks to help Southeast Asian countries bridge a gap in financing green infrastructure, which has widened during the pandemic as the region's economy contracted by 4.4% in 2020, ADB noted in a press statement. Southeast Asia's regional investment needs were estimated at $210 billion USD before the pandemic hit, it added.

"The program seeks to accelerate the flow of green capital from banks, investors, and capital markets to Southeast Asia by helping de-risk and prepare bankable green infrastructure investments. The program will also help countries scale up issuances of green and climate bonds to support sustainable growth in developing Southeast Asia" said ADB's ACGF Unit Head Anouj Mehta.

Indonesia’s Xendit Incorporates Infrastructure into Business Model

Building a digital payments infrastructure from the ground up in Southeast Asia is as challenging as it sounds. When FinTech company Xendit worked with a bank in Jakarta, a bulldozer came through and plowed up one of the city's main roads severing the lines that connected the bank to Xendit's data center. Now, Xendit builds its data centers inside banks.

This need for adaptability has allowed Xendit to thrive in markets that often defeat other entrants looking to capitalize on the region's explosive growth. Xendit recently raised $64.6 million in Series B funding in a round led by Accel; bringing the total raised by the company to $88 million since its 2015 founding in Jakarta, Indonesia. Xendit is also the first company in Indonesia to complete Y Combinator's accelerator program.

Initially launched as a peer-to-peer (P2P) payments platform, Xendit pivoted to the daunting task of building digital payment infrastructures from scratch out of necessity.

"We can see in developing and developed markets around the world, that for countries to move into service economies or digital economies, you need to have basic infrastructure in place, digital infrastructure, just like you need highways and roads in real life," Xendit CEO Moses Lo told PYMNTS. "You need infrastructure on the digital side and that didn't exist. So we pivoted into this and realized that to build the pipes, to build reliable payments, we had to build it ourselves."

In a region made up of thousands of islands with a vast array of payment options, this is no easy feat. Lo explained that when they began in Indonesia, payment processing through banks saw a relatively low 75% success rate: a figure that they've boosted to 99.6% in just four years.

This market is seeing a striking change in terms of its relationship with the digital world; as many new digital consumers have never had much of a relationship with laptops or computers and are simply going to mobile first. The market is also moving from cash to new ways of paying at a rapid pace, and is expected to drive $300 billion in payments volume by 2025. Today, one in every three of its citizens are new to digital services.

Xendit has been referred to as the Stripe of Asia. Similarly, their platform consists of application programming interfaces (APIs) that help a wide range of companies process payments. The company is also similar to Plaid in that they serve as a digital intermediary to integrate consumers' banking data into their solutions. However, unlike its American counterparts, Xendit had to build digital payments rails from scratch and build relationships with government regulators at the same time.

"You need to do the government relationship side rails to get the licenses to upgrade, and set up  the local partnerships….and in each of our [Indonesian] markets, there are different power dynamics than what exists in the U.S., and you have to understand those to be able to play well. There are lots of examples of companies who've tried and failed because they didn’t take that into consideration. Then you have to do product sales, marketing, et cetera. So you have to kind of combine all three. And I think that's what a player like us can do because we're local.” Lo explained.

Lo recalls the story of a major company that had been trying to come to Indonesia for two years. Although they worked with some of the region's biggest banks, they couldn't get regulatory clearance to operate. Xendit stepped in and got the clearance in six months, and also helped them create a product that was compliant not just in Indonesia, but also in the U.S. and U.K.

"It's super fun building the infrastructure layer," he said. "It's thankless work at times because we're not, you know, in the press every single day like Grab would be. But I think it's more fun. I think it's fun to watch these customers grow 90 percent the next month just because we enable them. Or watch businesses launch and scale at 50 percent month-on-month growth for four years. And they are able to do it without having to worry about all this info behind the scenes. So that's a real impact."

Podcast: Enabling Online Business with PayMongo

In the following podcast, PayMongo co-founder Luis Sia outlines the plethora of opportunities now available to Filipino entrepreneurs going into e-commerce.

As a serial entrepreneur, Sia didn't expect to go into financial technology (FinTech), but after seeing how small businesses struggled to accept digital payments, he knew something had to be done. In 2019, he co-founded PayMongo, which was shortly thereafter selected for the prestigious international startup incubator, Y Combinator – the first Filipino company since Kalibrr. The company has since garnered support from renowned figures like Peter Thiel (PayPal) and Justin Mateen (Tinder).

Throughout the pandemic, PayMongo's network has grown significantly with the amount of small business owners pivoting to e-commerce. The startup continues to diversify its products and services to cater to all needs for online business. With the Philippines' booming e-commerce market, both local and investors are eager to invest in Filipino companies.

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