Ride-hailing giant Didi Global said Friday it will delist from the New York Stock Exchange and pursue a listing in Hong Kong, succumbing to pressure from Chinese regulators concerned about data security.
It ran afoul of Chinese authorities by pushing ahead with its $4.4 billion U.S. IPO in July despite being asked to put it on hold while a review of its data practices was conducted.
The powerful Cyberspace Administration of China (CAC) then quickly ordered app stores to remove 25 mobile apps operated by Didi and also told the company to stop registering new users, citing national security and the public interest. Didi remains under investigation.
“Following careful research, the company will immediately start delisting on the New York stock exchange and start preparations for listing in Hong Kong,” Didi said on its Twitter-like Weibo account.
It later said in a separate English language statement that its board had approved the move.
“The company will organize a shareholders meeting to vote on the above matter at an appropriate time in the future, following necessary procedures,” it said.
Sources have told Reuters that Chinese regulators pressed Didi’s top executives to devise a plan to delist from the New York Stock Exchange due to concerns about data security.
“Didi’s plan to delist in the United States and the listing of Hong Kong stocks I believe will have an obvious impact on location decisions for large technology stocks’ future listings,” said Kenny Ng, securities strategist at Everbright Sun Hung Kai in Hong Kong.
“At the same time, this event makes the market believe that the current industry supervision of technology stocks in the mainland will continue, and the decline in the stock prices of technology stocks listed in Hong Kong today also reflects this factor.”
Sources have told Reuters that Didi is preparing to relaunch its apps in the country by the end of the year in anticipation that Beijing’s cybersecurity investigation into the company would be wrapped up by then.
The CAC did not immediately respond to a request for comment on Didi’s plans to delist from New York.
Didi made its New York debut on June 30 at $14 per American Depositary Share, which gave the company a valuation of $67.5 billion on a non-diluted basis. Those shares have since slid 44% until Thursday’s close, valuing it at $37.6 billion.
Shares in Didi investor SoftBank Group Corp fell more than 2% after the Didi announcement, also hurt by Southeast Asia ride hailing giant Grab’s slump in its Nasdaq debut.
SoftBank’s Vision Fund owns 21.5% of Didi, followed by Uber Technologies Inc with 12.8%, according to a filing in June by Didi.