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Didi shareholders expected to back U.S. delisting plan

Written by Nikkei Asia Published on   2 mins read

Investors are being forced to “play the long game” amid unrelenting pressure from Beijing.

Didi Global shareholders appeared set on Monday to back the company’s plan to delist from the New York Stock Exchange, less than a year after the Chinese ride-hailing company’s USD 4.4 billion ill-starred debut.

Didi warned investors last week that they may have trouble trading the shares after the delisting. But analysts believe many shareholders, especially those who invested in the company before its initial public offering, are braced to hold onto the shares until the company manages to placate Beijing regulators and secure a place on the Hong Kong Stock Exchange.

They “are likely willing to play the long game and wait to exit,” said Global Equity Research analyst Arun George, who publishes on the SmartKarma investment platform.

Didi, which will convene its shareholders’ meeting in the Chinese capital on Monday evening, has been under intense pressure from Beijing since it pushed ahead with its NYSE IPO last June on the eve of the Chinese Communist Party’s centenary despite official concerns that the move might give U.S. regulators access to sensitive data.

In the aftermath, regulators barred Didi from signing up new customers and had its 26 apps removed from local app stores. New restrictions were then imposed on overseas listings by Chinese companies.

Amid the pressure, Didi posted a 49.3 billion yuan (USD 7.4 billion) loss for 2021. Its shares, which listed at USD 14, closed Friday at USD 1.50.

When it announced plans to delist from New York in December, Didi had hoped to quickly secure a new listing elsewhere so that shareholders would be able to directly convert their holdings. But that proved infeasible after Beijing signaled to Didi that it would not lift operational restrictions on the company until after the U.S. delisting.

Didi’s once overwhelming market share has slipped over the past year as unrestrained rivals have grabbed away consumers with promotional offers and aggressive pricing.

After exiting the NYSE, Didi shares may still be able to trade over the counter in New York on what are known as Pink Sheets.

“It is not the end of the world for a company to be delisted as they could still be traded on Pink Sheets, which is mostly done by appointment,” said Travis Lundy, an analyst at Quiddity Advisors who also publishes on SmartKarma.

Tencent Holdings, China’s most valuable company by market capitalization, trades in New York only in this form. Tencent held a 6.5% stake in Didi as of Dec. 31, while SoftBank Vision Fund had a 20% interest, and U.S. ride-hailing group Uber Technologies held 11.9%.

Two weeks ago, Didi was added to a U.S. provisional list of more than 100 Chinese companies that face delisting by 2024 if they fail to give American regulators access to auditing records.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.


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