Didi targets $60 billion valuation in New York debut

The offering is likely to be the biggest U.S. IPO this year

An initial public offer (IPO) by China's Didi Global Inc in New York to raise up to $4 billion has been fully covered on the first day of its bookbuild, even as some investors fear tougher rules could hit growth, sources with direct knowledge said.

Didi plans to start trading on Wednesday.

The offering will be the biggest U.S. share sale by a Chinese company since Alibaba raised $25 billion in 2014 and is likely to be the biggest U.S. IPO this year.

The bookbuilding exercise is set to run until Tuesday when pricing will be set after the close of the U.S. market, according to a term sheet seen by Reuters.

Many investors still doubt if Didi can maintain a high growth rate for its core ride-hailing business in China, said a prospective investor at one Hong Kong-based hedge fund who asked not to be identified as he was not allowed to speak to media.

Its market share is already very high in big cities, which means there is limited room for its future growth, the source added. It's also challenging for the company to expand in lower-tier cities due to increasing competition from rivals, not to mention the potential impact of a regulatory crackdown.

Didi's targeted valuation is less than an initially expected range of $80 billion to $100 billion because potential investors expressed concern over its growth prospects and the chance of tighter regulation of Chinese tech firms, the sources said.

The valuation target and raising size were set after initial meetings with investors over the past two weeks.

A regulatory filing showed on Thursday Didi has set a price range of between $13 and $14 per American Depositary Share (ADS) and said it would offer 288 million such shares in the IPO. At the top of the range, the deal will raise $4.03 billion.

That suggests a valuation between $62.4 billion and $67.2 billion.

An overallotment option could see the company sell an extra 43.2 million shares to raise up to an extra $605 million.

Deal terms suggest a conservative approach for Didi that sources said had earlier eyed the higher valuation range.

The company's valuation exceeded $60 billion a year after its 2017 fundraising, sources have said.