Shareholders of ride-hailing group Didi Chuxing will vote on Monday to delist it from the New York Stock Exchange, bringing the company’s services back to Chinese app stores for the first time in almost a year.
The plan to delist comes nearly a year after the company advanced a $4.4 billion IPO in the United States despite signals from the Chinese Regulators warn against proceeding with listing.
The botched IPO on the eve of the Communist Party’s centenary has plunged the company into a months-long crisis. Didi’s shares have fallen 90 percent since the IP0, losing $60 billion in market value.
Unable to attract new users, Didi’s revenues have plummeted and losses have mounted, while layoffs have contributed to plummeting morale.
Didi’s founders Cheng Wei and Jean Liu who have both withdrawn from the limelight, hope that the exit from the US market will spur Beijing to complete the regulatory investigation. Didi said executives, who collectively own about 10 percent of the company’s stock, would vote to delist it.
The company’s board of directors, which includes representatives from major shareholders including tech giants Alibaba, Tencent and Apple, has also backed the measure, which could go ahead technically without the simple majority approval that Didi gave shareholders.
However, it remains unclear whether the delisting will be enough to put Chinese regulators at ease immediately. Didi said this month it was “uncertain” whether any of the company’s proposed corrective actions, including the delisting, would appease Beijing and allow it to “resume normal operations.”
The company once hoped to list its shares in Hong Kong before delisting in the US, but the regulatory investigation scrapped such plans.
Cherry Leung, an analyst at Bernstein, said Didi was in limbo while Beijing’s official crackdown continued. “Didi is currently in a deadlock pending the conclusion of China’s cybersecurity investigation,” she said.
“Regulators on the Chinese side want Didi to limit disclosures to the SEC,” she said, noting that the move to over-the-counter trading would allow the company to stop filing financial reports with US regulators and put its audit papers out of reach to bring the US Public Company Accounting Oversight Board. Beijing does not allow the PCAOB to conduct inspections of audits conducted in China.
The expected delisting comes despite repeated pledges from top economic officials, including Vice Premier Liu He, that China will complete it regulatory onslaught Alignment with its top tech companies.
But the investigation into Didi was spearheaded by the Cyberspace Administration of China, a Communist Party body reporting to China’s President Xi Jinping.
The regulator is at the forefront of China’s tech crackdown, and over the past two years has broadened its regulatory mandate from propaganda and online censorship to scrutiny of data and network security.
Additional reporting by Nian Liu in Beijing
Didi investors to vote on US delisting in bid to revive China business Source link Didi investors to vote on US delisting in bid to revive China business