On Wednesday, China’s ride-hailing giant Didi urged US investors to vote yes on delisting its shares from New York. Didi said it can’t pursue a new listing as it faces a cybersecurity review launched last July by Chinese regulators, which still has no clear end in sight.
Why it matters: The company said in a filing to the US’s Securities and Exchange Commission (SEC) that the completion of Beijing’s cybersecurity review is “a prerequisite” for seeking approval for another listing, which implies a further delay for Didi’s plan to list in Hong Kong instead.
Details: Didi will only be able to complete a cybersecurity review on the condition that the company removes itself from the New York Stock Exchange, according to the filing.
A settlement with the Chinese regulators is also a must for Didi to resume “normal” operations, including getting its apps back onto domestic app stores and having access to new users, which will benefit shareholders, the company said.
The Chinese ride-hailing company said it remains unsure whether its rectification program will comply with local laws and when its business can return to normal. A shareholder meeting will be held on May 23 to vote on Didi’s proposed delisting from New York.
Context: Didi initially announced plans to delist from the US and seek a new Hong Kong listing back in December. But the company had halted the process when it failed to meet the requirements on data security compliance, a March statement confirmed.
Didi’s losses more than doubled in 2021 to RMB 19.1 billion, while revenue grew by only 22.6% compared to the previous year to RMB 173.8 billion. The company has lost a massive $60 billion in market capitalization 10 months after it made its public debut in New York.
The Chinese government launched a cybersecurity investigation into Didi over alleged data security concerns last July, immediately after its $4.4 billion US IPO, and has since neither disclosed any results nor lifted its ban on the company’s services on local app stores.