Didi Global Choses Hong Kong Over New York Stock Exchange Amid Pressure From Chinese Regulators

Didi Global, the Chinese ride-hailing behemoth, has announced that it will delist from the New York Stock Exchange barely five months after its initial public offering (IPO) and pursue a listing in Hong Kong after Chinese regulators chastised it for refusing a request to put its IPO on hold.

Despite being urged to postpone its $4.4 billion IPO in the United States while a review of the company's data procedures was completed, Didi went ahead with it. The Chinese regulators, Cyberspace Administration (CAC), then promptly ordered the removal of Didi's mobile apps from app stores and forced the company to stop registering new customers, citing national security and public interest as justifications.

After Chinese regulators ordered Didi’s top executives to design a plan to delist from the New York Stock Exchange, now the company said in its Weibo account, "Following careful research, the company will immediately start delisting on the New York stock exchange and start preparations for listing in Hong Kong.”

However, Didi did not provide further details but stated in a second statement that a shareholder vote would be held at a later date.

The disruption of Didi's New York IPO demonstrates both Chinese regulators' enormous power and their brazen approach to wielding it. Chinese billionaire Jack Ma also ran afoul of Chinese regulators, which resulted in the dramatic cancellation of Ant Group's mega-IPO last year.

However, the latest move is also likely to dissuade Chinese companies from listing in the United States, prompting some to reassess their status as publicly traded corporations in America.

Didi debuted in New York on 30 June for $14 per American Depositary Share, giving the business a non-diluted valuation of $67.5 billion. Since then, the stock has dropped 44 per cent, valuing it at $37.6 billion as of 2 December.

As reported by Reuters, according to people familiar with the situation, Didi is planning to list in Hong Kong soon before delisting from the New York Stock Exchange. According to one of the sources, Didi plans to complete a dual primary listing in Hong Kong in the next three months and delist from New York by June 2022 under pressure from Beijing.

One important question is whether the stock exchange will allow it, considering that only 20 to 30 per cent of the company's main ride-hailing operation in China is completely compliant with regulations requiring three permits, according to a source.

As per previous reports, Didi is also planning to relaunch its apps in China by the end of the year, assuming that Beijing's cybersecurity probe into the business will be completed by then.