Didi to delist from NYSE to pursue Hong Kong listing after crackdown

Didi delist NYSE listing
FILE PHOTO: The logo for Chinese ride-hailing company Didi Global Inc is pictured at the New York Stock Exchange (NYSE) floor in New York City, U.S., June 30, 2021. REUTERS/Brendan McDermid/File Photo

HONG KONG (Reuters) – Didi Global said on Friday it will delist from the New York stock exchange and pursue a listing in Hong Kong, the latest development after it ran afoul of Chinese regulators by pushing ahead with its $4.4 billion US IPO in July.

Didi’s decision to delist in the US comes as a deepening regulatory crackdown wiped billions of dollars off the ride-hailing giant’s valuation.

Following are reactions to ride-hailing giant Didi Global’s decision to delist from the New York stock exchange and pursue a listing in Hong Kong, succumbing to pressure from Chinese regulators concerned about data security.


“As we expected, Didi will first delist its shares from the NYSE and start filing for listing on HKEX. The company is already facing class action lawsuit in the US, and we think Didi will buy back its shares at the same IPO price of US$14 per share. However, it may not be able to relist its shares in HK at the same price (rather at a lower price) given there will be stringent control by the state over its use of user’s personal data (which will place it at a disadvantage) and location related issues such as liquidity, etc.

“Beijing is also sending a warning to the entire internet sector in China to be ready to face more regulations and is likely to keep foreign investors away from Chinese tech stocks for some time.”


“Technically speaking, Didi’s US listing was not compliant with Chinese data security regulations.

“From a political perspective, China and the US have so far failed to reach an agreement on supervising US-listed firms. Apparently, the Chinese government hopes companies can choose Hong Kong as listing venue.”


“Chinese ADRs face increasing regulatory challenges from both US and Chinese authorities. For most companies it will be like walking on eggshells trying to please both sides. Delisting will only make things simpler.”


“Well, again no surprise to me. This is the only way that Didi can survive, and this is maybe a good thing for the investors in the US market. There are other issues related to Didi in addition to the data security. Didi also embedded financial services on their platform, they withheld the payment to the drivers, charge high fees for drivers, make loans with high interest rates etc. And the inherent problems of the share-riding due to the fact there is no appropriate regulation of the bad behavior of the drivers.

“I don’t think Didi qualifies to be listed anywhere before it separates the data platform services with financial services, and sets up an effective protocol to manage and ensure the drives’ responsibility and benefits.”


“The listing of Didi was largely expected given the crackdown post its IPO. It will now set a precedent for other US listed companies, especially those with data concerns.

“The crackdown started with Ant’s botched IPO. The Chinese government has already shown that it will go beyond what the market has expected. It will be a while before sentiments thaw in relation to Chinese names.”


“Didi’s plan to delist in the United States and the listing of Hong Kong stocks I believe will have an obvious impact on location decisions for large technology stocks’ future listings.  At the same time, this event makes the market believe that the current industry supervision of technology stocks in the mainland will continue, and the decline in the stock prices of technology stocks listed in Hong Kong today also reflects this factor.

“On the other hand, Didi, the company itself, also has its own unique factors. Because Didi’s business has more data related to customer information, which is leading the regulatory authorities to pay it special attention.”


“I think this change does not bring anything positive for Didi’s investors. The authorities have not announced a final punishment on Didi and the investigation is still going on after more than 100 days. So far, the risk for Didi and its shareholders is still unlimited.”


“In the short- to medium-term, this means volatility for pockets of the market that are really exposed to global trade and US-China geopolitics specifically, and you might start to see some pressure on Hong Kong stocks, which have tended to look to raise capital in the United States but base themselves in China and draw most of their profits from the Chinese economy.

“Longer term this is more significant, because this is going to be one of those frogs in a beaker scenario where very, very slowly there’s going to be a decoupling between the US and China in terms of their economic relationship, as well as their enmeshment with one another in the global financial system.”


“My two main thoughts at this point are: If confirmed that CAC really is the main actor behind the push, then big flex for the regulator. Would be a further indication of it’s rising power and influence.

“The apparent issue is data security, but we still don’t have great insight into what the specific concern is. This is the outstanding question.”

Following are key events since Didi publicly announced its intention to list in the United States:

June 11 – Beijing-based Didi makes public the filing for its US listing, setting the stage for what is expected to be the world’s biggest initial public offering of 2021.

June 17 – Reuters reports that China’s market regulator has begun an antitrust probe into Didi, citing three people with knowledge of the matter.

The probe, the latest in a sweeping crackdown on China’s so-called “platform” companies, is investigating whether Didi used any competitive practices that squeezed out smaller rivals unfairly, and whether the pricing mechanism used by Didi’s core ride-hailing business is transparent enough, sources said.

June 30 – Didi raises $4.4 billion in its IPO, pricing it at the top of its indicated range and increasing the number of shares sold, giving it a valuation of $73 billion on a fully diluted basis and $67.5 billion on a non-diluted basis.

The shares end their first day of trading slightly above the IPO price.

July 2 – The Cyberspace Administration of China (CAC) says it has launched an investigation into Didi to protect national security and the public interest, and that Didi was not allowed to register new users during the probe, sending Didi shares lower.

Didi says it plans a comprehensive examination of cybersecurity risks and would cooperate fully with the relevant government authority.

July 4 – The CAC orders Chinese app stores to stop offering Didi’s app after finding that the firm had illegally collected users’ personal data.

Didi says it had stopped registering new users and would remove its app from app stores, as well as making changes to comply with rules and protect users’ rights. It says the move may hurt its revenue.

July 5-6 – Didi says it was unaware before its IPO that the CAC would launch a cybersecurity investigation or order a halt in China to new user registrations and a suspension of app downloads.

Didi shares fall as much as 25% in the first US trading session since Chinese regulators ordered its app off mobile app stores in China.

July 8 – Medical data group LinkDoc Technology becomes the first Chinese company to pull back from plans to list in the United States after regulators started an investigation into Didi.

July 30 – The US Securities and Exchange Commission says it will not allow Chinese companies to raise money in the United States unless they fully explain their legal structures and disclose the risk of Beijing interfering in their businesses.

Aug 10 – SoftBank says it will pause its investing in China as it waits for regulatory action against the country’s tech firms to play out.

Aug 11 – Autonomous driving startup Pony.ai suspends its plan to go public in New York through a merger with a blank-check firm at a $12 billion valuation, after it failed to gain assurances from Beijing that it would not become a target of a crackdown against Chinese technology companies, people familiar with the matter say.

Aug 27 – China is framing rules to ban internet companies whose data poses potential security risks from listing outside the country, including in the United States, according to a person familiar with the matter.

Sept 2 – Chinese regulators summon 11 ride-hailing firms including Didi, Geely’s Caocao and Meituan’s ride-hailing unit to discuss points of concern.

Sept 3 – The city of Beijing is considering taking Didi under state control, Bloomberg News reports.

Sept 4 – Didi denied reports that the Beijing city government is coordinating companies to invest in it.

Sept 7 – Beijing city government told Reuters in a faxed statement it was not advising companies to invest in Didi.

Sept 8 – China’s Ministry of Transport said it would crackdown on illegal behaviour in the country’s ride-hailing industry.

Sept 10 – Chinese government officials told leading delivery and ride-hailing companies including Didi, Meituan, Alibaba Group’s Ele.me and Tencent Holdings, to improve how they distributed incomes and ensure rest periods for workers.

Sept 20 – Didi co-founder and President Jean Liu has told some close associates that she intends to step down, Reuters reported.

Sept 30 – China published new draft measures aimed at bolstering its new data security law, including definitions of what it considered “core” and “important” data.

Oct 21 – China’s cybersecurity watchdog suggested Didi and two other US-listed tech companies explore listings in Hong Kong, the Wall Street Journal reported.

Oct 29 – CAC published draft guidelines that will subject companies with more than 1 million users in the country to a security review before they can send user-related data abroad.

Nov 8 – SoftBank Group Corp valued its Didi stake at $7.5 billion, 40% below acquisition cost.

Nov 11 – Didi was preparing to relaunch its ride-hailing and other apps in China by the end of the year in anticipation that Beijing’s investigation into the company will be wrapped up by then, Reuters reported.

Nov 14 – CAC published draft rules that would require companies pursuing share listings in Hong Kong to apply for cybersecurity inspections if they handle data that concerns national security. Large internet platforms planning to set up headquarters, operating or research centres abroad should also submit a report to regulators, CAC said.

Nov 26 – Chinese regulators have pressed top executives of Didi to devise a plan to delist from the New York Stock Exchange due to concerns about data security, sources said.

Dec 3 – Didi announced plan to delist from New York and seek a Hong Kong listing.

(Reporting by Kane Wu; Editing by Sumeet Chatterjee)

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