Didi investors to vote on NY delisting after Beijing crackdown

1 month ago 42

HONG KONG (BLOOMBERG) - Didi Global is widely expected to secure a blessing from shareholders on Monday (May 23) to delist in New York, capping an 11-month ordeal that wiped out around US$60 billion of its market value and turned the ride-hailing giant into a symbol of China's tech crackdown.

The Internet firm's biggest backers including SoftBank Group, Tencent Holdings and Uber Technologies are expected to vote in favour of a delisting at an extraordinary general meeting in Beijing, according to market observers. That would clear the way for the company to cooperate with regulators who are demanding an overhaul of its data systems as part of a cybersecurity review. Only then will Didi be free to begin preparing for a Hong Kong share float, the best outcome investors say they can hope for.

The retreat is part of what many see as comeuppance for a company known for pushing the limits with Beijing authorities.

Following years of rapid growth, Didi forged ahead with an initial public offering (IPO) in June 2021 despite regulatory opposition. Days after the US$4.4 billion IPO, the country's Internet overseer forced it off China's app stores and initiated a sweeping cybersecurity probe into the company, amid concerns of data leaks to a foreign power. The debut was so controversial it triggered an onslaught of regulatory actions constraining Chinese companies from raising capital overseas.

SoftBank and other major backers are likely to back Didi's delisting from the New York Stock Exchange in hopes that it will appease Beijing, securing chances of a comeback including an eventual listing in Hong Kong. SoftBank officials were not immediately available for comment.

Shen Meng, director of Beijing-based boutique investment bank Chanson & Co, said investors had little choice but to accept the delisting but will closely track Didi's fate to see whether they could still trust the Chinese market. It is still unclear what actual punishment awaits Didi, which has been in talks with the Cyberspace Administration of China about a fine and other penalties.

"Didi's proposed delisting, if realised, will certainly deal a serious blow to investors' confidence on Chinese stocks," he said. "Having said that, if the delisted companies could be 'reborn' in Hong Kong with good valuation and liquidity, market concerns over Chinese investment will likely fade away in no time. After all, investors don't care whether...

Read Entire Article