Didi Shareholders Vote to Delist From NYSE in Wake of China's Tech Crackdown




  • In Business
  • 2022-05-23 20:21:51Z
  • By Bloomberg

(Bloomberg) -- Didi Global Inc. secured the blessing of shareholders to delist from the New York Stock Exchange, capping an 11-month ordeal that wiped out around $70 billion of its market value and turned the ride-hailing giant into a symbol of China's tech crackdown.

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It plans to file the required paperwork with the US Securities and Exchange Commission on or after June 2 in order to delist, Didi said in a statement Monday. Its shares closed 4% lower, after gaining as much as 10% at the trading open.

The shareholder vote clears the way for the company to work with Chinese regulators who are demanding an overhaul of its data systems. That would allow the company to begin preparing for a Hong Kong share float, the best outcome investors have said they can hope for.

"This news is well anticipated and is sort of a relief rally," said Brendan Ahern, chief investment officer at Krane Fund Advisors LLC. "The move is in order to allow its regulatory overview to take place, which then begs the question if and when the company could relist and there's been talk about the company potential re-listing on the Hong Kong stock exchange."

Didi's biggest shareholders, which include SoftBank Group Corp., Tencent Holdings Ltd. and Uber Technologies Inc., have watched Didi's shares fall about 90% since going public, when it was valued around $80 billion. After delisting, the company will likely see its stock traded over the counter on the so-called pink-sheets market, home to penny stocks and other riskier businesses.

Read more: Didi's Move From NYSE to Hong Kong - What to Know: QuickTake

Some investors could be forced to sell because their mandates don't allow them to hold unlisted shares. Hedge funds have already reduced their Didi holdings by 29% to about $231.9 million during the first quarter, according to a Bloomberg analysis of filings. Even those who are free of such mandates, such as SoftBank, may question whether it's worth holding onto the shares given uncertainty over Beijing's punishment, increased competition from smaller rivals and stalled expansion overseas.

It is still unclear what actual punishment awaits Didi, which has been in talks with the Cyberspace Administration of China about a fine and other penalties.

Didi's shareholders, which also include the likes of Fidelity Investments and Blackrock Inc., have so far avoided commenting on the delisting.

"The Didi issue fundamentally boils down to a lack of communication between the company and Chinese regulators at the time of its IPO last year. China isn't trying to destroy its homegrown tech companies but its roll out of new regulations have at times been clumsy. Didi is one such case," said Kevin T. Carter, chief investment officer at EMQQ Global.

(Updates share price and adds additional comment in last paragraph)

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