Goodbye to New York: Didi bows to regulatory pressure to delist itself in the US

Just five months after its debut, rideshare giant Didi Global said it plans to pull out of the New York Stock Exchange and go public in Hong Kong, a surprising turnaround that has led it to bow to Chinese regulators irritated by your IPO in the United States.

“After careful investigation, the company will immediately begin to withdraw its listing from the New York Stock Exchange and prepare its listing in Hong Kong.“, said Didi on his Weibo account, similar to Twitter.

Didi did not explain the reasons for the plan, but indicated in another statement that it will organize a timely shareholder vote and ensure that its New York-listed shares are convertible into “freely negotiable shares”In another internationally recognized exchange.

Some sources told Reuters last month that Chinese regulators pressured top executives of Didi to devise a plan to leave the New York Stock Exchange due to data security concerns.

Didi went ahead with a $ 4.4 billion initial public offering in June despite being asked to suspend it pending a review of the company’s data policies.

The powerful China Cyberspace Administration (CAC) then quickly ordered app stores to remove 25 of Didi’s mobile apps and asked the company to stop registering new users, citing national security and public interest.

Didi -whose applications offer, in addition to transport services, products such as deliveries and financial services- remains under investigation.

Kirk Boodry, Analist of Redex Research, which publishes on Smartkarma, said there is an expectation that Didi will have to buy shares at the $ 14 IPO price to avoid legal trouble and, at the very least, will pay more than what the shares are trading now. However, there is still uncertainty about what the end of its listing meant for investors.

The end of the listing of Didi in New York – which is probably a difficult and complicated process – illustrates both the enormous influence that Chinese regulators have and their emboldened attitude to exert it.

Billionaire Jack Ma also took issue with Chinese authorities by criticizing the country’s regulatory system, leading to the dramatic cancellation of a mega IPO for Ant Group last year.

The move is likely to further deter Chinese companies from listing in the United States and could cause some to reconsider their status as publicly listed companies in the United States.

“Chinese companies listed in the United States face increasing regulatory challenges from the US and Chinese authorities. For most companies, it will be like walking on eggshells trying to please both parties. Going public will only simplify things“, said Wang Qi, responsible for the fund manager MegaTrust Investment (HK).

Didi it plans to proceed with a listing in Hong Kong shortly and is not considering going private, sources with knowledge of the matter told Reuters.

Its aim is to complete a double primary listing in Hong Kong in the next three months and, under pressure from Beijing, to leave the New York Stock Exchange by June 2022, one of the sources said.