Didi Global, the ride-hailing behemoth, announced it will delist from the New York Stock Exchange five months after its initial public offering and seek a listing in Hong Kong, after losing the support of Chinese regulators for refusing a request to delay the IPO in the United States.
Didi proceeded with its $4.4 billion initial public offering in the U.S. despite being urged to pause it while an investigation into its data practices was performed.
The powerful China Cyberspace Administration (CAC) then promptly ordered app shops to remove 25 of Didi's mobile applications and directed the firm to halt new user registrations, claiming national security and the public interest. Didi is still being investigated.
"Following thorough study, the company will immediately begin delisting from the New York Stock Exchange and preparing for a Hong Kong listing," Didi wrote on its Weibo-like Twitter account.
It did not provide an explanation for the idea, but disclosed in a second statement that it would have a shareholder vote at a later date.
Didi made its New York debut on June 30 at a price of $14 per American Depositary Share, giving the buisiness a non-diluted valuation of $67.5 billion. Since then, those shares have fallen 44% to Thursday's close, putting the company at $37.6 billion.
The disruption of Didi's New York IPO - which is expected to be a lengthy and unpleasant process - demonstrates both China's enormous regulatory clout and their emboldened approach to wielding it.
Jack Ma, the billionaire, also ran afoul of Chinese regulators, resulting in the dramatic cancellation of Ant Group's mega-IPO last year.
Additionally, it is likely to dissuade Chinese corporations from listing in the U.S. and may cause others to reassess their status as publicly traded companies in the country.
Chinese ADRs face rising regulatory scrutiny from both the U.S. and China. For the majority of businesses, it will be like walking on eggshells while attempting to appease both parties. "Delisting will simplify matters," Wang Qi, chief executive officer and fund manager at MegaTrust Investment, said.
Sources familiar with the matter said Chinese officials urged Didi's top executives to craft a plan to delist from the NYSE on data security concerns.
However, listing in Hong Kong may prove challenging.
One significant hurdle is whether the stock exchange would approve it given that just 20% to 30% of the company's primary ride-hailing operation in China complies properly with regulations requiring three permits, a source familiar with the subject said on Friday.
