Hedge fund manager, Kyle Bass, said China's removal of Didi's application just days after it launched its initial public offering is a clear hostile act against the U.S. and American investors. The founder of Hayman Capital Management said China's actions against the ride-hailing company were no mere coincidence.
Didi raised more than $4.4 billion after it listed its shares on the New York Stock Exchange on Tuesday last week. Two days later, Chinese regulators announced that they would be conducting an investigation into the company's business practices. Regulators also ordered the removal of the company's application on local application stores.
"The Chinese believe deeply in symbolism and numerology. Banning an IPO that just went public in the U.S. - with U.S. investor money - on our Independence Day was basically a big F-U to the United States," Bass said.
After regulators announced the launch of an investigation and the application ban, Didi's share prices crashed by more than 20%. Didi was accused of breaking local privacy laws and being a cybersecurity risk.
"They knew this was going public. They knew they were going to ban it from app stores and shut it down. Nothing happens without the behest and pleasure of Xi Jinping," Bass said.
Bass said the actions taken against Didi by Chinese regulators cost American investors billions of dollars. Didi's market valuation dropped from $70 billion the day it went public to $57 billion after regulators announced the crackdown.
Sources with knowledge in the matter said Didi had been warned by regulators to delay its IPO and for it to conduct an internal review of its network. Didi said it was unaware that regulators would ban its application and conduct an investigation against it.
Bass - a vocal opponent of the Chinese Communist Party - had repeatedly called on the government to do more to protect American investors from the "whims" of China. He called on the Securities and Exchanges Commission to rescind the IPO and recover its investors' money.
"Send the money back to investors. It was clearly sold under false pretenses, therefore fraudulently," Bass said.
Bass referred to a federal securities law that allows the SEC to rescind such transactions if buyers were not presented with adequate information at the time of the purchase. Legal experts said it is unclear if the law could be applied to this case.
