China asks Didi to delist from US bourses

BEIJING • Chinese regulators have asked Didi Global's top executives to devise a plan to delist from US bourses, sources familiar with the matter said yesterday.

This is an unprecedented request that is likely to revive fears about Beijing's intentions for its giant technology industry.

The country's tech watchdog wants Didi's management to take the company off the New York Stock Exchange because of concerns about leakage of sensitive data, the sources said, asking not to be identified.

The Cyberspace Administration of China (CAC), the agency responsible for data security in the country, has directed Didi to work out precise details, subject to government approval, they said.

Proposals under consideration include a straight-up privatisation or a share float in Hong Kong followed by a delisting from the United States, the people added.

If the privatisation proceeds, the proposal will likely be at least the US$14 initial public offering (IPO) price, since a lower offer so soon after the June IPO could prompt lawsuits or shareholder resistance, the sources said.

If there is a secondary listing in Hong Kong, the IPO price would probably be a discount to the share price in the US, which was US$8.11 at Wednesday's close.

Deliberations continue and it is possible the regulators will backtrack on their request, the sources said. Representatives for Didi and the CAC did not respond to requests for comment.

Didi sparked the ire of Beijing when it proceeded with its New York stock offering this summer, despite regulatory requests that it ensure the security of its data before the IPO.

The Chinese regulators quickly launched multiple investigations into the company and have considered a range of unprecedented penalties, Bloomberg News reported in July.

It is possible that the delisting would be part of a package of punishments for Didi. Beijing's municipal government has proposed an investment in the company that would give state-run firms effective control, Bloomberg News reported in September.

Even if Didi shifts its listing to Hong Kong, it will have to address the data security concerns that have drawn regulatory scrutiny. The company may have to give up control of its data to a third party - again undercutting its price tag.

A withdrawal from US bourses could stoke fears of an exodus of Chinese firms as Washington and Beijing quarrel about access to listed firms' books.

BLOOMBERG