Topline
Chinese ride-hailing company Didi said on Friday it will delist from the New York Stock Exchange and prepare for a public listing in Hong Kong, a move that comes after several months of pressure from Chinese regulators who barred the company from signing up new users and ordered a cybersecurity probe into its practices.
Didi has started delisting on the New York Stock Exchange and preparing for its listing in Hong ... [+]
Key Facts
Didi first announced the plans to delist in a statement on Chinese social media platform Weibo, stating that the decision was taken after “careful research.”
In a separate statement issued to Didi Global’s investors, the company said the move has been authorized by its board.
Instead of buying out all publicly held shares—a move that would cost the company billions—Didi said it will delist its NYSE shares while ensuring that they are convertible into shares that could be freely traded on another internationally recognized stock.
The ride hailing giant noted that it will organize a shareholder meeting to vote on the issue at an “appropriate time in the future.”
Citing unnamed sources, Reuters previously reported that Didi’s top executives were pressed by Chinese regulators to come up with a plan for the delisting over data security concerns.
Key Background
Didi debuted on the New York Stock Exchange in June this year after raising around $4.4 billion from its IPO. At the time of its listing, the company was valued at $68 billion—a number that briefly shot up even higher. But the company’s stock began to tumble in July after regulators in China opened an investigation into the company’s cybersecurity practices. The Cyberspace Administration of China (CAC) ordered mobile app stores in the country to remove 25 apps operated by Didi and barred the company from signing up new customers. Authorities in Beijing were reportedly angered by the fact that Didi pressed forward with its U.S. IPO despite being asked to put in on hold while a review of its data security practices was being conducted. While the investigation into Didi is still ongoing, Reuters reports that the company is expecting it to be wrapped up by the end of the year and is preparing to relaunch its apps in the country.
Tangent
Amid continued diplomatic tensions with China, lawmakers in Washington have moved to target Chinese companies listed in the U.S. Under a new law passed last year, foreign companies could be kicked off American stock exchanges if their auditors do not comply with requests for information from U.S. regulators. The Holding Foreign Companies Accountable Act (HFCAA) was passed last year after Chinese authorities repeatedly turned down requests from U.S. regulators to inspect the audits of Chinese firms that list and trade in the United States. China has pushed back against such requests and argued that giving U.S. regulators access to such audits could pose a national security risk to China. In August, the Wall Street Journal reported that Beijing was itself working on new regulations that would ban several Chinese companies that handle sensitive user data from listing abroad.
Further Reading
Didi Moves to Leave U.S. Stock Market Just Months After Huge Offering (The New York Times)
Didi Global plans to delist from New York, seek listing in Hong Kong (Reuters)
Didi Global Plans to Delist From New York Stock Exchange (Wall Street Journal)
