On Friday, ride-hailing giant Didi Global said, it will delist from the New York Stock Exchange and pursue a listing on the Hong Kong Stock Exchange following increased pressure from Chinese regulators.
Earlier this year in July Didi had pushed ahead with its $4.4 billion U.S. IPO despite Chinese regulators asking it to put it on hold while they reviewed its data practices.
China’s Cyberspace Administration of China (CAC) had ordered app stores to remove 25 mobile apps operated by Didi and had told the company to stop registering new users, citing national security concerns.
Didi continues to remain under investigation.
“Following careful research, the company will immediately start delisting on the New York stock exchange and start preparations for listing in Hong Kong,” said Didi on its Weibo account.
It has also stated that its board had approved the delisting move.
“The company will organize a shareholders meeting to vote on the above matter at an appropriate time in the future, following necessary procedures,” said Didi.
According to sources familiar with the matter at hand, Chinese regulators had pressed Didi’s top executives to create a plan to delist from the New York Stock Exchange on data security concerns.
“Didi’s plan to delist in the United States and the listing of Hong Kong stocks I believe will have an obvious impact on location decisions for large technology stocks’ future listings,” said Kenny Ng, securities strategist at Everbright Sun Hung Kai in Hong Kong.
“At the same time, this event makes the market believe that the current industry supervision of technology stocks in the mainland will continue, and the decline in the stock prices of technology stocks listed in Hong Kong today also reflects this factor.”
According to sources, Didi is preparing to relaunch its app in China by the end of 2021 in anticipation that China’s cybersecurity investigation would have completed the investigation by then.
In June 30, Didi made a debut on the New York Stock Exchange at $14 per American Depositary Share, giving it a valuation of $67.5 billion on a non-diluted basis. As of Thursday, those shares have slid down giving it a market capitalization of $37.6 billion.
With Didi’s announcement reaching the market, shares of Didi investor SoftBank Group Corp fell by more than 2%.
According to a June SEC filing by Didi, SoftBank’s Vision Fund owns 21.5% of Didi, followed by Uber Technologies Inc 12.8% stake.