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DiDi will delist from the NYSE and pursue a Hong Kong listing
After a smashing debut in July, the company ran into a regulatory compliance tussle with Chinese regulators, leading to a fall in its share price
DiDi Global announced that it would delist from the New York Stock Exchange (NYSE) and pursue a listing in Hong Kong, on Friday. The announcement comes after the ride-hailing giant ran afoul of Chinese regulators by pushing ahead with its $4.4 billion U.S. IPO in July.
The company issued a statement on Thursday stating that DiDi’s board has authorized the company to file for a delisting of its American depositary shares (ADS) from the NYSE.
The company will instead pursue a listing in Hong Kong and ensure that the U.S. stock will be converted into freely tradable shares on another internationally recognized stock exchange.
Why is DiDi delisting?
Chinese regulators have for long opposed the listing of domestic companies in the U.S. markets for fear of exposing their data to foreign powers.
Days after DiDi listed itself on the NYSE, the government announced a cybersecurity probe into the firm and forced its services off domestic app stores. In addition to this, the Chinese regulator began a broader overhaul of the framework for international listings by Chinese companies.
In early September, Chinese regulators summoned 11 ride-hailing firms including DiDi Global Inc, and issued an ultimatum to fix certain issues by December 1, 2021.
Bloomberg reported, officials had directed DiDi management to come up with a plan to withdraw from the NYSE, last week.
DiDi shares were sold at $14 each in the IPO, which was the largest debut of a Chinese firm in the U.S. since Alibaba raised $25 billion in 2014. Since then its shares have dropped 52% from their post-IPO peak, wiping out about $42 billion of market value.
Subsequent moves
Bloomberg reported that DiDi is planning to file for the Hong Kong listing around March. The company had filed for a Hong Kong listing in July but abandoned the effort after the city’s exchange, questioned Didi’s compliance with Chinese regulations.
Bloomberg reported that the firm didn’t have licenses to operate in certain cities and many of its drivers lacked a household registration, or hukou, for the cities where they lived, part of municipal requirements for providing on-demand ride-hailing services there.
DiDi’s stock jumped more than 16% to just over $9 after the announcement on Friday premarket trading, still well below its $14 debut level, before erasing most gains.