Didi on delisting from U.S. and list in Hong Kong

A mobile phone shows the interface of Didi’s APP in Yichang, Hubei province, China, July 4, 2021.

Costfoto | Barcroft Media | Getty Images

Chinese ride-hailing giant Didi said Friday that it will start delisting from the New York Stock Exchange, and make plans to list in Hong Kong instead.

Didi said it reached that decision after careful consideration.

Shares of Didi plunged last week after reports that Chinese regulators have asked the firm’s executives to formulate a plan to delist from the U.S. Regulators reportedly want Chinese ride-hailing giant Didi to delist from the New York Stock Exchange because of concerns about leakage of sensitive data.

Didi shares have plunged 44% since the company’s IPO in June, closing at $7.80 on Thursday.

The delisting jeopardizes the massive stakes held by SoftBank and Uber, which combined own over 30% of Didi, according to FactSet. SoftBank shares in Japan were down 2.5% on Friday.

Didi reportedly drew the ire of regulators when it pushed ahead with an IPO without resolving outstanding cybersecurity issues that the authorities wanted solved. Didi is China’s largest ride-hailing app and holds lots of data on travel routes and users.

The tech giant first listed in the U.S. less than six months ago — on June 30.

“I think China has made it clear they no longer want technology companies listing over in U.S. markets, because it brings them under the jurisdiction of U.S. regulators,” Aaron Costello, regional head of Asia at Cambridge Associates, said Friday after the news broke.

“So our view has been that almost all of these U.S.-listed tech companies will relist either Hong Kong or the mainland,” he told CNBC’s “Street Signs Asia.”

Didi’s announcement comes less than 24 hours after the U.S. Securities and Exchange Commission finalized rules that allow it to delist foreign stocks for failing to meet audit requirements.

The rules will let it implement the U.S. Holding Foreign Companies Accountable Act, which was passed in 2020 after Chinese regulators repeatedly denied requests from the Public Company Accounting Oversight Board, which was created in 2002 to oversee the audits of public companies.

— CNBC”s Arjun Kharpal, Ari Levy contributed to this report.

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