Business & Investment

Didi’s stock plummets by more than 20% with plans to delist from the New York Stock Exchange

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Hong Kong — Just five months after its debut, Ride Hailing giant Didi said he plans to withdraw from the New York Stock Exchange and pursue a listing in Hong Kong.

The response from investors was quick. The company’s stock fell 22.17%, losing about $ 8.4 billion in market value. At a closing price of $ 6.07 on Friday, Didi shares fell about 57% from the June 30 IPO price.

“As a result of careful investigation, the company will soon begin delisting on the New York Stock Exchange and preparing to go public in Hong Kong,” Diddy said in a Weibo account like Twitter.

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Diddy didn’t elaborate, but in another statement, he could organize a shareholder vote at the right time to convert New York-listed stocks into “freely tradeable stocks” on another globally recognized exchange. Said that it would be.

Market participants said the decision would increase investor uncertainty in US-listed Chinese corporate stocks. US-listed stocks of Alibaba, Baidu and other Chinese companies fell on Friday.

Baird’s market strategist, Michael Antonelli, said:

Sources ruled Reuters last month that Chinese regulators excluded Diddy’s top executives https://www.reuters.com/world/china/china-asks-didi-delist-us-security-fears-bloomberg-news He said he pressured him to come up with a plan to do so. -2021-11-26 from the New York Stock Exchange due to data security concerns.

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Diddy’s board of directors was convened Thursday to approve the US delisting and Hong Kong listing plans, two sources with knowledge of the issue said.

Diddy pushed for a $ 4.4 billion initial public offering in June, despite being asked to hold it while Chinese authorities were reviewing data practices.

The powerful China Cyberspace Administration (CAC) has ordered the app store to immediately remove 25 Didi mobile apps, and the company has stopped registering new users for national security and public interest reasons. Instructed to.

Didi, which offers apps that offer products such as delivery and financial services in addition to ride-hailing services, is still under investigation.

Kirk Hoodry, an analyst at Redex Research, publishing on Smartkarma, may need Didi to buy shares at an IPO price of $ 14 to avoid legal issues and pay at least a higher price than the current stock price. I said I couldn’t.

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However, there remained uncertainty about what delisting meant for investors. “There may be hopes that Diddy’s management will improve regulatory affairs by doing this, but I’m not confident about it,” added Boudry.

Support for Diddy’s listing in New York is likely to be a difficult and cumbersome process, but highlights the immense influence of Chinese regulators and the bold approach to exercising it.

Billionaire Jack Ma rebelled against Chinese authorities after blasting China’s regulatory system, leading to the dramatic collapse of Ant Group’s mega IPO last year.

Diddy’s move could further discourage the listing of the United States by Chinese companies and could encourage them to reconsider their position as a US listed company.

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“China’s ADR faces increasing regulatory challenges from both US and Chinese authorities. For most companies, it’s like walking on eggshells trying to please both sides. Abolition only simplifies things, “said Wang Qi, Chief Executive Officer of Fund Manager MegaTrust Investment (HK).

Diddy plans to go public in Hong Kong soon and isn’t considering keeping it private, sources familiar with the matter told Reuters.

According to one source, it aims to complete its double primary listing in Hong Kong within the next three months and delist from New York by June 2022.

The source was not allowed to speak to the media and refused to be identified. Diddy didn’t immediately respond to Reuters’ request for comment, and CAC hasn’t commented on the announcement yet.

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“Shortly after US IPO investors tried to sue DiDi for failing to disclose ongoing negotiations with Chinese authorities, Mirabeau Equity Analyst William Mileham said:

“DiDi doesn’t seem to be waiting for a dual listing, but it could be delisted from the US before it starts trading on the Hong Kong Stock Exchange.”

Hong Kong hurdles

However, listing in Hong Kong can be complicated, especially over a three-month period. This is given the history of Didi’s compliance issues and the history of scrutiny of unlicensed vehicles and part-time drivers.

Only 20% -30% of Diddy’s Core Ride Hailing Business https: //www.reuters.com/business/finance/exclusive-how-didis-govt-relations-team-navigated-myriad-regulators-until-ipo- 2021 China’s -07-20 is fully compliant with regulations that require three permits related to the provision of ride-hailing services, vehicle licenses and driver’s licenses, sources said earlier.

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Diddy’s IPO prospectus said it had obtained a permit to dispatch the city, which makes up the majority of the ride together. We are not responding to further inquiries regarding permissions.

These issues were Diddy’s main obstacle to conducting an IPO in Hong Kong before, and sources familiar with the issue are uncertain whether the stock exchange will now approve it on Friday. Said that.

Nan Lee, an associate professor of finance at Shanghai Jiao Tong University, said:

The Hong Kong Stock Exchange has not commented on individual companies, a spokesman said.

According to the IPO prospectus, Diddy provided 25 million daily rides in China in the first quarter. According to Diddy’s June submission, its major shareholders are SoftBank Vision Fund, which holds a 21.5% stake, and Uber Technologies Inc, which holds a 12.8% stake.

Sources also told Reuters that Didi is preparing to restart the app in China by the end of the year in anticipation of Beijing’s cybersecurity investigations ending by then.

(Report by Julie Zhu, Kane Wu, Cheng Leng, Zoey Zhang, Additional Report by Brenda Goh, Josh Horwitz, Alun John, Sayantani Ghosh, Scott Murdoch, Marc Jones, Lewis Krauskopf, Ira Iosebashvili, Edited by Sumet Chatterjee, Edwina Gibbs Jan Harvey, Dan Grebler, Richard Chang, Aurora Ellis)

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Didi’s stock plummets by more than 20% with plans to delist from the New York Stock Exchange

https://financialpost.com/pmn/business-pmn/didi-shares-plunge-more-than-20-on-plan-to-delist-from-nyse Didi’s stock plummets by more than 20% with plans to delist from the New York Stock Exchange

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