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Chinese online taxi-hailing Didi is now facing a double blow: one is from the review of domestic regulators, and the other is the anti-cooperation of US and global investors. Investors have questions about how Didi completed its listing under the shadow of supervision. Didi is in a state of unwillingness on both sides of Didi. Didi’s share price is currently down 14% from its IPO price.
According to a report from the Wall Street Journal today, Didi is not pleased by rebelling against Chinese regulators and annoying investors. In the last few days before landing on the New York Stock Exchange, Chinese regulators received hints from Didi that the IPO plan would be suspended, but Didi told the US underwriters that the Chinese government had agreed to the listing. The consequences of this incident have exceeded Didi itself, and will affect future Chinese companies’ plans to go public in the United States.
In the last few days before Didi Global Inc. (DIDI) went public on the New York Stock Exchange at the end of June, the information that the Chinese online ride-hailing giant told the US investment bank consultants and the information received by the Chinese regulators Inconsistent.
According to people familiar with Didi’s communications with regulators, Chinese regulators thought that Didi would suspend the IPO and deal with data security issues. However, according to people familiar with Didi’s listing process, Didi has made another set of guarantees in New York, stating that the Chinese government has agreed to release its IPO.
These people familiar with the matter said that the investment bank consultant responsible for handling Didi’s IPO did not know that the company was facing imminent risk of government reorganization, so it was still proceeding with the transaction. On June 30, the world‘s largest online car-hailing platform began to be officially listed on the New York Stock Exchange. The stock price rose 16% on the second day of listing, and its market value reached approximately US$80 billion. But this is just a flash in the pan. The Chinese government was first surprised by the sudden listing of Didi, and then launched a counterattack on July 2, launching a cyber security review of Didi and banning Didi from accepting new user registrations. In the next few days, Chinese regulators notified the app store to remove the Didi Chuxing app, and announced tightening of the supervision of Chinese companies that have already listed overseas or attempted to list overseas.
Didi is now facing a double whammy: one is the scrutiny from domestic regulators, and the other is the anti-cooperation of US and global investors. Investors have questions about how Didi completed its listing under the shadow of supervision. Didi’s share price is currently down 14% from its IPO price.
According to the report, in the United States, underwriting agencies participating in Didi’s IPO are facing anger and doubts from fund managers and other investors: Why did the underwriting agencies fail to foresee this situation?
The consequences of this matter have exceeded Didi itself. Taking into account that investors are already arguing, investment bank consultants said that Chinese companies that are preparing to go to the US for an IPO may temporarily dispel this idea. Increasing tensions in Sino-US relations have brought a turning point in the harmonious relationship between China and Wall Street. China’s heavyweight listing transactions, including Alibaba Group Holding Ltd.’s 2014 IPO, have allowed Chinese companies to use the rich experience of the U.S. investment banking industry to raise huge amounts of capital, while also giving U.S. investors the opportunity to get from these companies. Share a slice of the growth of the country.
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