(Yicai Global) July 1 -- Chinese ride-hailing giant Didi Chuxing, whose shares were oversubscribed by 10 times, finished its first trading day on the New York Stock Exchange 1 percent up while completing the biggest initial public offering among Chinese firms listed in the US after Alibaba Group Holding in 2014.

Didi Chuxing's stock price [NYSE: DIDI] surged as much as 28.6 percent intraday but closed at USD14.14 yesterday. Its market cap was USD67.8 billion, less than three-quarters of that of US rival Uber Technologies.

Didi Chuxing expanded its issuance scale to 317 million American depositary shares from the previously planned 288 million units due to high demand, foreign media reported. The Beijing-based firm raised at least USD4.4 billion from its IPO.

Prospects

For American investors, participating in Didi Chuxing's IPO was an opportunity that should not be missed, said Brendan Ahern, chief investment officer at Krane Funds Advisors, said in an interview with Yicai Global.

Although US investors will compare Didi Chuxing with Uber, the two are quite different, said Ahern. Owning a car in Chinese cities is relatively more expensive than in the US while China's high-speed railway network is very developed so the ride-hailing company has good prospects, he explained.

The flotation was huge but there's still a big gap between Didi Chuxing and Alibaba. In September 2014, the e-commerce giant raised USD25 billion in the biggest IPO in history.

But Didi Chuxing may later attract passive inflows of capital. After the bell rang, Morgan Stanley Capital International announced that it would add the mobility company to the MSCI China All-Share Index on July 15. Another index provider, FTSE Russell, said earlier that if the Chinese firm's market cap reaches a certain level, it is expected to quickly be included in the FTSE Global Equity Index Series.

IPO Proceeds

A big part of the IPO proceeds will be invested abroad. Thirty percent of the total will be used to expand Didi Chuxing’s business outside of China, according to its prospectus. The firm has operations in countries including Mexico and Brazil.

Another 30 percent will go to technology upgrades in ride-hailing, electric vehicles, and autonomous driving. A fifth of the funds will be spent on developing new products and improving existing ones. The rest will be for working capital and potential strategic investments.

First Profit

The transport company's performance reflects China's economic recovery. Didi Chuxing reached profitability this year while Uber reported losses amid the lingering Covid-19 pandemic. In the first quarter, Didi Chuxing made a net profit of CNY5.5 billion (USD851.1 million), while revenue more than doubled to CNY42.2 billion (USD6.5 billion).

In 2020, the company posted a net loss of CNY10.6 billion, almost a billion more than in 2019. Revenue fell 8.5 percent to CNY141.7 billion (USD21.9 billion).

Editor: Emmi Laine, Xiao Yi