Chinese regulators have asked top officials at Didi Global Inc. to draw up a plan for delisting from US markets, with people familiar with the matter saying it was an “unprecedented request” about Beijing’s intentions for its large tech industry. Concerns are likely to be raised.
DiDi • China • New York Stock Exchange:
The country’s tech watchdog wants to remove the company from the New York Stock Exchange due to fears of leaking sensitive data from the administration, with people saying they should not be identified while talking about a sensitive issue. He said China’s cyberspace administration, which is responsible for data security in the country, had instructed Didi to work on accurate details, subject to government approval.
The people added that the proposals under consideration include direct privatization or share float in Hong Kong followed by delisting from the United States. People said that if privatization goes ahead, the proposal would cost at least $ 14 an IPO, as there could be legal action or shareholder resistance immediately after the initial public offering in June. If Hong Kong has a secondary listing, the IPO price will likely be reduced to US $ 8.11 per share by the end of Wednesday.
SoftBank Group Corp. Shares of Didi, the largest minority shareholder, fell more than 5% in Tokyo. People say talks are ongoing and it is possible that regulators will back down at their request. Either option would be a major blow to Ride Healing Giant, the Chinese firm’s largest US IPO issuer since Alibaba Group Holdings Limited in 2014. Didi and CAC representatives did not respond to requests for comment.
Didi sparked outrage in Beijing when it pushed ahead with its New York Stock Exchange offer this summer, despite regulatory requests to ensure the safety of its data before the IPO. According to Bloomberg News reported in July that Chinese regulators immediately launched several investigations against the company and considered unprecedented fines.
It is possible that delisting was part of the punishment package for Didi. Bloomberg News reported in September that the Beijing municipal government has proposed an investment in the company that would provide effective control to state-owned enterprises. Such an investment could help Didi repurchase its US-traded shares.
Didi is currently under the management of co-founder Cheng Wei and President Jane Liu’s management team, which gained 58% of the total voting power after the company’s initial public offering. SoftBank and Uber Technologies Inc. Didi has the largest minority shareholders.
Even if Didi moves her list to Hong Kong, she will have to address data security concerns that have been regulated. The company may have to relinquish control of its data to a third party – reducing its value again.