DiDi Delisting From NYSE, Applying to List in Hong Kong Instead After Buckling Under Pressure From Chinese Regulators

The logo for Chinese ride-hailing company Didi Global Inc. is pictured during the IPO on the New York Stock Exchange floor in New York City, on June 30, 2021. Brendan McDermid/Reuters

Chinese ride-hailing giant DiDi is delisting from the New York Stock Exchange (NYSE) and applying to list in Hong Kong instead, just months after making its debut in the United States, the company announced Friday.

“Following careful research, the company will immediately start delisting on the New York stock exchange and start preparations for listing in Hong Kong,” the company said on its account on the Chinese microblogging network, Weibo.

In a separate English language statement, Didi said its board of directors had approved the move and “supports the company to undertake the necessary procedures” and delist its American depositary shares from the New York Stock Exchange while ensuring that they “will be convertible into freely tradable shares of the company on another internationally recognized stock exchange at the election of ADS holders.”

“The company will organize a shareholders meeting to vote on the above matter at an appropriate time in the future, following necessary procedures. The Board has also authorized the company to pursue a listing of its class A ordinary shares on the Main Board of the Hong Kong Stock Exchange,” the statement read.

Traders work during the IPO for Chinese ride-hailing company Didi Global Inc. on the New York Stock Exchange (NYSE) floor in New York City on June 30, 2021. Brendan McDermid/Reuters

The move comes after Didi—which beat Uber in China—faced mounting pressure from Chinese regulators to delist from the U.S. exchange, Bloomberg reported.  China’s tech watchdog cited security concerns over the potential leakage of sensitive data when asking the company to delist, as per Bloomberg.

Earlier this year, Beijing launched a cybersecurity probe into the vehicle for hire company to address alleged national security risks arising from its public listing in the United States, Chinese state media reported at the time.

The move came just two days after its shares began trading on the NYSE in July, raising $4.4 billion in one of the largest U.S. initial public offerings (IPO) over the past decade while also allegedly defying regulatory requests that it ensure the security of its data before the IPO.

The country’s top internet regulator, the Cyberspace Administration of China, at the time cited “preventing national data security risks, protecting national safety, and ensuring public interests” as reasons for the review, which came amid growing tensions between Washington and Beijing.

Chinese regulators in July ordered Didi to stop registering new users pending the investigation, and told app stores to pull Didi’s app. Seven regulatory bodies, including those overseeing state security, public security, tax, and transportation, visited Didi’s offices in mid-July to conduct an on-site investigation.

A driver opens the Didi Chuxing ride-hailing app on his smartphone in Beijing on July 2, 2021. Jade Gao/AFP via Getty Images

In response to the pulling of its app, Didi said in a statement, “The company will strive to rectify any problems, improve its risk prevention awareness and technological capabilities, protect users’ privacy and data security, and continue to provide secure and convenient services to its users.”

However, the Beijing-headquartered company, which provides a wide range of app-based services across Asia-Pacific, Latin America, Africa, Central Asia, and Russia, defied regulators and went public anyway.

In August, China passed a data protection law, laying out some of the world’s most stringent measures yet on how private sectors handle personal data, as officials move to crackdown on the country’s tech sector.

Didi is just one of many Chinese tech companies that have also faced pressure from regulators in the United States and Europe.

On Thursday, the U.S. Securities and Exchange Commission (SEC) finalized rules relating to the Holding Foreign Companies Accountable Act, which would allow it to delist foreign firms if they fail to observe U.S. accounting rules and comply with requests for information from regulators.

The bipartisan legislation was signed into law by former President Donald Trump on Dec. 18, 2020, and would see foreign companies delisted from U.S. exchanges if they fail to comply with the Public Company Accounting Oversight Board’s (PCAOB’s) audits for three consecutive years.