Didi was initially listed on the New York Stock Exchange but then it was compelled to delist due to regulatory issues in China.
Chinese ride-hailing giant, Didi Global Inc (NYSE: DIDI) is reportedly making strategic moves in preparation for its upcoming Initial Public Offering (IPO) on the Hong Kong Stock Exchange (HSE) next year.
People with knowledge of the matter stated that the company recently informed its employees that they have the option to sell their shares as part of an employee stock ownership program. This program provides a liquidity option for employees and aligns with Didi’s strategy to streamline its shareholder base and improve corporate governance ahead of the listing.
Didi Navigates Turbulent Waters amid IPO Plans
Didi has been through a tumultuous journey in recent years. The company, initially listed on the New York Stock Exchange (NYSE), was compelled to delist due to regulatory issues in China.
Didi’s troubles began in July 2021 when it went ahead with a $4.4 billion listing on the NYSE, defying the Chinese regulatory authorities. Shortly after the debut, the Cyberspace Administration of China (CAC) launched an investigation into the company, citing national security and public interest concerns.
An earlier report from Coinspeaker highlighted that Didi initiated the regulator’s onslaught. The ride-hailing business went public in the United States without waiting for a cybersecurity review of its data prices. CAC stated that its investigation revealed that Didi improperly acquired millions of customer records for seven years.
Furthermore, the study discovered that the corporation began gathering millions of pieces of customer data in 2015. CAC further stated that Didi engaged in data processing practices that jeopardized national security. Didi’s infractions, according to the regulator, are substantial and “should be severely punished.”
Subsequently, in July 2022, the Didi IPO was derailed as it was slapped with a substantial $1.2 billion fine. The company was also prohibited from taking on new users, and its app was unavailable from mid-2021 until January 2023, dealing a significant blow to its operations.
Amid these regulatory challenges, Didi saw its market share in China decline significantly. The company’s market share, which had previously stood at about 90%, dropped to roughly 70%.
The combination of regulatory sanctions and a loss of consumer trust resulted in this decline. Didi’s competitors, including domestic and international players, capitalized on the situation and gained ground in the ride-hailing market.
Didi Returns to China
After an 18-month suspension in China, Didi received the green light to relaunch its app. In its official announcement, Didi stated its dedication to addressing the security issues highlighted during the national network security review.
The company outlined plans to implement “effective measures” to guarantee the security of its platform facilities and big data. Didi’s promise signifies a shift towards regulatory compliance and the restoration of trust.
Didi’s tumultuous journey is, however, colored by SoftBank Group Corp (TYO: 9984), a key investor in the company. SoftBank had invested an estimated $11 billion in Didi and held a stake of 20%, valued at approximately $3.2 billion.