Didi is facing an SEC probe into its botched IPO, company says

Read Time:1 Minute, 56 Second




Hong Kong
CNN Business

Didi says it is facing an investigation by US regulators into its botched IPO last year.

The Chinese ride-hailing giant said in a regulatory filing this week that it is cooperating with the investigation by the US Securities and Exchange Commission about its share offering, “subject to strict compliance with applicable PRC laws and regulations.”

“We cannot predict the timing, outcome or consequences of such an investigation,” the company added.

The SEC didn’t immediately respond to requests for comment after business hours. Didi didn’t immediately respond to a request for comment.

Didi launched a much-anticipated $4.4 billion initial public offering on the New York Stock Exchange on June 30, 2021, the biggest US share offering by a Chinese firm since Alibaba’s blockbuster debut in 2014.

But days later, the Chinese government banned Didi from app stores in the country and launched an investigation into its handling of customer data. Authorities from the powerful Cyberspace Administration of China accused Didi of breaking privacy laws and posing cybersecurity risks. Their actions were also widely seen as punishment for the company’s decision to go public overseas instead of in China.

The drama was bad news for investors: Didi’s shares crashed almost 20% on the first trading day after the ban.

Since then, US regulators have taken a more cautious approach towards Chinese IPOs: In July, the SEC told its staff to ask for more disclosures from Chinese companies seeking to go public in the United States before it approves any plans for them to sell shares.

The regulatory crackdown hit Didi’s domestic business. The company reported a $4.7 billion loss for the third quarter of 2021. Its revenue dropped 1.7% from the same period a year earlier.

Under pressure from Chinese regulators, Didi announced in December that it would start the process of delisting from the NYSE and pivot to Hong Kong.

The company will hold a shareholder meeting on May 23 in Beijing to vote on the delisting plan, it said in a statement late last month.

Shares of Didi have lost 86% of their value since its IPO last June.

Paul R. La Monica contributed to this report.

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