BIG IDEA | ‘The prospectus has a diagram, above, of the corporate structure, which looks almost normal. But everything below the double arrow — the actual ride-hailing business, etc. — is slightly askew.’
‘So here is the prospectus for Didi Global Inc., a Cayman Islands company that has certain contractual relationships with a giant Chinese ride-hailing company. (Technically the top-level Chinese company is called Beijing Xiaoju Science and Technology Co. Ltd., though colloquially it is “Didi Chuxing.”)’
- ‘Didi Global did an initial public offering of its American depositary shares last week; it has a market capitalization of something like $57 billion.’
‘Page 12 of the prospectus has a diagram, above, of the corporate structure, which looks almost normal:’
- ‘Looks like a holding company with some intermediate holding companies and operating subsidiaries, fine.’
‘The only weird thing is that somewhere near the middle there is a double arrow (representing “contractual arrangements”) rather than a single arrow (representing “equity interest”).’
- ‘Didi Global’s shareholders “own,” in some fairly normal sense, everything above the double arrow, right down to one “wholly foreign-owned enterprise” (WFOE) in China.’
- ‘Everything below the double arrow — the actual ride-hailing business, etc. — is slightly askew; they just have contractual rights to do stuff with it.’