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Didi Prepares U.S. Delisting, Hong Kong Share Debut

A pedestrian stands behind a logo at the Didi Global Inc. offices in Hangzhou, China, on Monday, Aug. 2, 2021. China will step up oversight of its ride-hailing companies, adding to a widening campaign by Beijing to rein in its internet sector. Photographer: Qilai Shen/Bloomberg
By Bloomberg
03 Dec 2021 0

Didi Global Inc. has begun preparations to withdraw from U.S. stock exchanges and will start work on a Hong Kong share sale, a stunning reversal as it yields to demands from Chinese regulators that had opposed its American listing. 

The ride-hailing giant’s board has authorized the company to file for a delisting of its American depositary shares from the New York Stock Exchange and will pursue a listing in Hong Kong, it said in a statement Thursday. It will ensure that the U.S. stock will be convertible into freely tradable shares on another internationally recognized stock exchange, according to the statement.

Chinese regulators had asked Didi’s top executives to devise a plan to delist from U.S. bourses because of concerns about leakage of sensitive data, Bloomberg reported last week. The ride-hailing giant sparked the ire of Beijing when it proceeded with its New York stock offering this summer, despite regulatory requests that it ensure the security of its data before the IPO. Regulators placed the company under a cybersecurity review days after its debut, and has since asked Didi to work on plans for a withdrawal from the NYSE.

Read more on Chinese regulator’s demands of Didi

Didi shares were little changed at $7.80 on Thursday, having tumbled nearly 45% from their IPO price. Executives had considered proposals including a straight-up privatization or a share float in Hong Kong followed by a delisting from the U.S., people with knowledge of the matter told Bloomberg.

If the privatization proceeds, the proposal will likely be at least the $14 IPO price since a lower offer so soon after the June initial public offering could prompt lawsuits or shareholder resistance, the people had said. If there is a secondary listing in Hong Kong, the IPO price would probably be a discount to the share price in the U.S.

Didi’s decision follows mounting pressure from both Washington and Beijing on the universe of Chinese companies listed in the U.S., from its biggest tech giants to old-economy stalwarts like PetroChina Co. The U.S. government is inching further on efforts to boot Chinese companies off American stock exchanges for not complying with Washington’s disclosure requirements. At the same time, Beijing is said to be drafting regulations to effectively ban companies from going public on foreign stock markets through variable interest entities, according to people familiar with the matter, closing a loophole long used by the country’s technology industry to raise capital from overseas investors.

The Securities and Exchange Commission on Thursday announced its final plan for putting in place a new law that mandates foreign companies open their books to U.S. scrutiny or risk being kicked off the New York Stock Exchange and Nasdaq within three years. China and Hong Kong are the only two jurisdictions that refuse to allow the inspections despite Washington requiring them since 2002.

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