Didi Global has been advised by China's cybersecurity regulator to delay its overseas initial public offering, a report from The Wall Street Journal said. Despite the recommendation to conduct a review of its network security, Didi still moved forward with its listing.
Sources said the company decided to move ahead with its initial public offering because of increasing pressures from investors. Two days after it went public last week, the Cyberspace Administration of China launched its own investigation into the company's business, resulting in a significant drop in Didi's stock price.
After the CAC's announcement, Didi's share prices in New York dropped by more than 5.3%. The company raised more than $4.4 billion during its offering, which was one of the largest listings by a Chinese company in the U.S. since Alibaba's debut in 2014.
The agency said it had ordered the removal of the company's application from local application stores. The agency accused the company of illegally collecting personal user data, an accusation Didi has denied.
"After checks and verification, the Didi Chuxing app was found to be in serious violation of regulations in its collection and use of personal information," the CAC said.
Didi said Tuesday that the removal of its application from Chinese stores will adversely affect its revenues for the current quarter. Didi said the suspension of its application from Chinese stores will not affect existing users but anyone without an account will not be able to use its services.
"The company will strive to rectify any problems, improve its risk prevention awareness and technological capabilities, protect users' privacy and data security, and continue to provide secure and convenient services to its users," Didi said.
Didi said it wasn't aware that the CAC would conduct an investigation and remove its application. Didi said the investigation may have been prompted by a rumor that it was planning to hand over user data to the U.S. after its listing. Didi said all data it gathers from users are stored locally and it would never hand over user information to any foreign governments.