Chinese ride-sharing giant Didi Global has begun preparations to delist from the New York Stock Exchange, and subsequently relist in Hong Kong, the company announced on Friday.
The move comes less than six months after its $4.4 billion initial public offering toward the end of June, which drew the ire of Chinese regulators because it reportedly never received a clear go-ahead. The powerful Cyberspace Administration of China ordered the removal of all 25 of the company’s apps from app stores shortly after its public debut, citing reasons such as violations around data collection.
“After careful study, our company will start work today to withdraw from the New York Stock Exchange, and prepare for a listing in Hong Kong,” Didi said in an one-sentence statement via its verified account on China’s Twitter-equivalent Sina Weibo.
In a separate statement via its website, the company says its board supports and has authorized the decision to undertake “the necessary procedures and file the relevant applications for the delisting of the company’s ADSs (American Depositary Shares) from the New York Stock Exchange.” It will also ensure that the ADSs will be convertible into freely tradable shares on another internationally recognized stock exchange.
A Didi spokesperson says the company has no additional comment on the timeline or potential price points of a future listing. Didi now trades at $7.80 apiece, down more than 40% from its offering price of $14 per share. Its 38-year-old Chief Executive Cheng Wei now has a net worth of $2.4 billion, while its President Jean Liu has dropped out of the world’s billionaire ranks following a tumble in the company’s shares.
Analysts say the stunning reversal of what was one of the biggest U.S. share sales by a Chinese company could be a harbinger of more withdrawals in the future. Just one day before Didi’s announcement, the U.S. Securities and Exchange Commission put out its final plan for new rules that require foreign companies listed on U.S. stock exchanges to submit their books for auditing review, or risk being kicked off the New York Stock Exchange or Nasdaq within three years. China has long cited national security concerns and resisted such requirements.
“Officials appear to be encouraging local companies to enact contingency plans ahead of increasingly likely U.S. de-listings over audit rules,” says Brock Silvers, managing director of investment firm Kaiyuan Capital. “Didi almost certainly represents the start of a repatriation trend, one which may please both Beijing and Washington but which should nonetheless cause real concern for markets on both sides of the Pacific.”