China’s Didi to delist from New York and go public in Hong Kong

China’s Didi to delist from New York and go public in Hong Kong

Chinese ride-hailing group Didi Chuxing said it would delist from the New York Stock Exchange in an acceleration of China’s decoupling from US capital markets as Beijing cracks down on the country’s leading technology groups.

The company, which has been hit by increased regulatory scrutiny in China, wrote on its official Weibo account on Friday that it would begin the process of delisting and prepare to go public in Hong Kong.

Didi said its board had authorised the delisting in New York of its American depositary shares “while ensuring that ADSs will be convertible into freely tradable shares of the Company on another internationally recognised stock exchange”.

Hong Kong’s Hang Seng Tech index, which tracks 30 of China’s biggest technology companies, fell as much as 2.4 per cent on Friday following the news. Ecommerce group Alibaba was down 5.3 per cent, food delivery service Meituan dropped 4.8 per cent and internet group Tencent lost 3.2 per cent.

Didi launched its $4.4bn New York initial public offering in June, which made it the biggest listing by a Chinese company in the US since Alibaba in 2014. Days later, Chinese regulators ordered Didi’s app to be taken off domestic app stores. The company was also banned from signing up new users.

The IPO, which was completed in the week before the Chinese Communist party celebrated its centennial, angered party and government officials who felt the group had brushed aside their concerns related to national security and Didi’s vast trove of mapping and other sensitive data.

Didi’s listing also came amid a long-running crackdown on the dominance of China’s biggest technology groups that began in November 2020, when President Xi Jinping ordered the last-minute halt of the Shanghai and Hong Kong dual listing of Ant Group, Jack Ma’s fintech platform.

Ma, once the country’s richest and most celebrated entrepreneur, had angered Xi and other officials by criticising Chinese financial regulators weeks before the planned IPO, which was set to be the world’s biggest ever.

Since the scuppered listing, Ma, who also founded ecommerce platform Alibaba, has all but disappeared from public view.

Didi’s rush to announce the plan to move its listing to Hong Kong came just ahead of the end of a six-month lock-up at the end of December that will allow company executives and almost all of its shareholders to begin dumping shares in New York.

“The government can order something without realising how complicated it is,” said a lawyer in Beijing about the pressure from Chinese authorities on Didi to exit the US.

Lawyers said the company has two paths to withdraw its US listing. If Didi can put together the financing, it could buy out shareholders, privatise and then pursue a Hong Kong listing.

The second, more likely option would be to list in Hong Kong and then push US ADS holders to convert, said analysts.

Didi had avoided listing on the more stringent Hong Kong stock exchange this year because of increased regulation of the ride-hailing industry. Lawyers said Beijing would have to provide clarity on Didi’s compliance issues to get the listing done quickly.

“The big shareholders like SoftBank, Sequoia and Tencent won’t dare to protest and defy the government,” said one investor in Beijing.

Didi said it would hold a shareholder vote on the matter.

Additional reporting by Sun Yu in Shanghai, Emma Zhou in Beijing and William Langley in Hong Kong

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