Intimidated by Chinese language regulators, Didi plans to maneuver out of New York months after making his debut

© Reuters. FILE PHOTO: A sign from Chinese rideshare company Didi can be seen at its headquarters in Beijing, China on July 5, 2021. REUTERS / Tingshu Wang

By Julie Zhu and Kane Wu

HONG KONG (Reuters) – Ride-hailing giant Didi Global announced it would delist from the New York Stock Exchange and seek a listing in Hong Kong just five months after debuting it – after piquing the wrath of Chinese regulators for one Request to publish its US IPO has been put on hold.

Didi pushed its $ 4.4 billion US initial public offering despite being told to put it on hold during a review of its data practices.

The powerful Cyberspace Administration of China () then quickly ordered app stores to remove 25 of Didi's mobile apps and urged the company to stop registering new users, citing national security and the public interest. The investigation against Didi is still ongoing.

"After careful research, the company will immediately begin delisting on the New York Stock Exchange and preparing for listing in Hong Kong," Didi said on his Twitter-like Weibo (NASDAQ:) account.

She did not justify the plan, but announced in a separate statement that she would organize a shareholders' vote in due course.

The overturning of Didi's New York listing – likely a difficult and chaotic process – illustrates both the tremendous power Chinese regulators have and their encouraged approach to use it. Billionaire Jack Ma also came into conflict with the Chinese authorities, resulting in the dramatic failure of a mega IPO for Ant Group last year.

It will likely continue to discourage Chinese companies from listing in the United States as well, and could prompt some to reconsider their status as US publicly traded companies.

“Chinese ADRs are facing increasing regulatory challenges from both the US and Chinese authorities. For most businesses, it will be like walking on eggshells trying to please both sides (HK).

Sources told Reuters that Chinese regulators have urged Didi executives to develop a delisting plan bloomberg-news-2021 -11-26 from the New York Stock Exchange over concerns about data security.

However, listing in Hong Kong could prove to be complicated.

A key challenge is whether the exchange would be ready to approve it, given that only 20-30% of the company's core vehicle-driving business in China is fully compliant with regulations that require three approvals, a source knowledgeable on Friday said .

The source, who was not authorized to speak to the media and declined to be identified, added that it had been the main obstacle for the company from going public in Hong Kong previously.

Didi did not immediately respond to Reuters' request for comment.

Sources have also told Reuters that Didi is preparing to restart his apps -11 in China by the end of the year, pending Beijing's cybersecurity investigation into the company by then.

The CAC did not immediately respond to a request for comment on Didi's plans to remove New York from the list.

Didi debuted in New York on June 30 at a price of $ 14 per American Depositary Share, grossing the company $ 67.5 billion in undiluted value. Those stocks have fallen 44% since then, as of Thursday's close, and are valued at $ 37.6 billion.

Didi investor SoftBank Group Corp's shares fell 2% after Didi's announcement, which was also hurt by the slump in Southeast Asian ridehailing giant Grab on its Nasdaq debut.

SoftBank's Vision Fund owns 21.5% of Didi, followed by Uber Technologies (NYSE 🙂 Inc with 12.8%, as Didi submitted in June.

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