Just months after the Chinese ride-hailing group’s ill-fated initial public offering in New York, Didi Global (NYSE:DIDI) plans to delist its shares in the U.S. and move to a listing in Hong Kong instead.
This move would accelerate the financial decoupling between the United States and China, which has already witnessed Chinese companies being expelled from American exchanges.
The shift comes as authorities in Beijing wrap up a cybersecurity inquiry into the company. Shortly after the IPO in July, the firm encountered immense pressure from Chinese authorities stating that it would ban Didi from app stores in China due to a privacy breach.
Didi went public at a valuation of $68 billion and, according to FactSet, had a market capitalization of about $37 billion as of Thursday. The company’s stock is now worth about half of its $14 IPO price, a loss of nearly $30 billion.
Pressure on Didi and other Chinese firms that trade in the United States is not just from Beijing. Screws have also been tightened on companies from the world’s second-largest economy by Washington.
Since late 2019, over a dozen US-listed Chinese companies of American stock exchanges have sought alternative listings in Hong Kong, including Alibaba Group Holding Ltd and NetEase Inc.
However, these companies have retained their U.S.-listings.
On Thursday, the Securities and Exchange Commission of the United States has finalized rules that would allow it to delist foreign firms that refuse to open their books to U.S.-regulators.
For years, China has rejected U.S. audits of its firms, citing national security concerns.
Sources said Didi plans to proceed with a Hong Kong listing soon before delisting from New York. The company is under pressure from Beijing to delist from New York by June 2022 and aims to complete a dual primary listing in Hong Kong within the next three months.
On Friday, the firm wrote on its verified Weibo account, “After a careful study, the company will start delisting on the New York Stock Exchange immediately, and start preparations for listing in Hong Kong.”
The news shook Chinese firms. Stocks plunged more than 5% for E-commerce firm JD.com, while Alibaba lost 3%.
Baidu was down 3%, and NetEase, also trading in New York, slid 5.4%. In Tokoyo, Shares of Didi’s Internation Investor Softbank dropped 0.7% on Friday.
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