Didi loses 44% after halting planned Hong Kong stock listing

Didi Global Inc.’s stock fell. (DIDI) rose 44% on Friday after the company suspended preparations for its planned listing in Hong Kong.

The decision was made when China’s Cyberspace Administration (CAC) informed executives of the ride-sharing giant that its proposals to prevent security and data leakage did not meet the requirements, According to people familiar with the matter. One person, who asked to remain anonymous because the information is private, said the main Didi apps, which were removed from local app stores last year, will remain suspended for now.

The company and its bankers stopped working on the Hong Kong list that was originally scheduled for the summer of this year, people said. In addition to handling the CAC review, Didi is also working on finishing They said the fourth-quarter results as required for inclusion in the prospectus.

ADRs in the US posted their biggest decline since they began trading in the US last June, dropping to $1.89 in New York.

Didi became one of the main targets of a crackdown on the tech sector by Chinese authorities after it launched an initial public offer (IPO) of $4.4 billion of shares in June. Days after its listing, the company underwent a cybersecurity investigation and its services were removed from Chinese app stores.

Since then, the ride-sharing giant has explored various alternatives, including transferring data to an offshore Chinese company and selling a stake to state-backed companies, Bloomberg News reports.

Its shares had already fallen about 76% from their IPO price before Friday’s plunge. Didi revealed a $4.7 billion loss after revenue shrank in the September quarter following Beijing’s regulatory crackdown on the tech sector.

Didi announced in December its plan to be delisted in the US and seeking to be listed in Hong Kong.

The suspension threatens to derail Didi’s plans to bring its listing closer to home, which would allay Beijing’s concerns about leaking sensitive data abroad. Now, CAC’s dissatisfaction with the proposed safeguards has put those plans in limbo and raises questions about regulators what penalties the company may have in store.

One person said that the Anti-Corruption Authority may announce the results of the investigation in the coming weeks. Didi and CAC representatives did not immediately respond to requests for comment.

Didi’s controversial share sale sparked a series of regulatory actions that prevented Chinese companies from raising capital abroad. The Chinese government has tightened rules for overseas listings, introducing requirements that companies with at least one million users undergo a cybersecurity review in advance, and companies in negative-listed industries must apply for an exemption in advance. To proceed with the stock sale.

Bloomberg News said in December that the company had selected Goldman Sachs Group, CMB International Securities Ltd and CCB International Holdings Ltd to work on its planned Hong Kong listing.

Didi’s inclusion was expected to precede a wave of Chinese debuts near home, particularly from the sensitive internet world. The suspension of its listing plans is fueling uncertainty over the government’s intentions for large industries after an unprecedented series of regulatory actions against the country’s largest companies, from Alibaba Group Holdings Limited. (9988) From Jack Ma to Mitwane (3690).

Last month, Bloomberg News reported that Beijing ordered state-owned companies to report their exposure to Ma’s Ant Group Co. , the company most affected by Xi Jinping’s campaign to rein in “disturbed capital” and take control of powerful private companies. The sudden move sparked a sell-off in the Chinese market and fueled speculation that Beijing is preparing for another attack on the world’s largest internet platform.

US-listed Chinese stocks fell on Thursday amid news that five additional companies, including BeiGene Ltd and Yum China Holdings Inc., were identified. , is temporarily on the list of companies facing a potential penalty for part from the Securities and Exchange Commission.

–With the help of Coco Liu

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