Didi in talks for a second-quarter IPO in Hong Kong on its way to delisting from New York, sources say

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Didi Global is in talks to launch its initial public offering (IPO) in Hong Kong in the second quarter, as China’s dominant ride-hailing company prepares to exit the New York Stock Exchange (NYSE), according to two sources familiar with the matter.

Didi’s bankers have had preliminary discussions with the Hong Kong Exchanges and Clearing Limited (HKEX) before submitting the A1 form to officially apply to list on the exchange, according to the sources, requesting anonymity for discussing a matter before its announcement.

Depending on market conditions, the Beijing-based company may list in Hong Kong in the second quarter, the sources said, adding that the financial terms of the proposed listing are still being worked on. HKEX’s spokesman declined to comment on individual cases.

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Didi forced its way last June to a US$4.4 billion IPO in New York that defied injunctions by Chinese regulators, who later described the controversial listing as a “deliberate act of deceit.” The move set off a spate of retributions against Didi, forcing its smartphone application – the platform for drivers and passengers to interact – to be taken off app stores and setting off a series of cybersecurity investigations into the company’s use of customers’ data.

In December, Didi said it would delist from New York and explore listing in Hong Kong. The company’s bankers are now busy finding a solution to ensure Didi meets all the listing requirements in Hong Kong, including the licensing of its drivers and other issues, the sources said.

Didi will be a test to see if Hong Kong can step up as the alternative listing avenue for more than 200 Chinese companies that are currently listed on US exchanges, where they have come under increasing legislative scrutiny for everything from accounting standards to alleged ties to the Chinese military and US sanctions on Xinjiang.

Hong Kong’s government and the local burse have rolled out the red carpet to welcome US-listed Chinese companies to raise capital, offering a series of incentives and regulatory reforms starting on January 1.

“With mainland companies seeking to grow and still hoping to explore international financing in the face of increasing regulatory uncertainty in the US, it is likely that we will see more China concept stocks return from the overseas market,” Hong Kong’s Financial Secretary Paul Chan Mo-po said in a speech to the 15th Asian Financial Forum this week. “We are actively making preparations for that.”

Didi’s listing would also be a big boost to the HKEX, whose IPO tally shrank 17 per cent in 2021, its first decline since 2017. Hong Kong was the world’s top IPO destination in seven of the previous 12 years.

Didi’s capitalisation shrank to US$23.6 billion as of the close of trading on Tuesday in New York. Didi’s NYSE listing was handled by a syndicate of banks comprising Goldman Sachs, Morgan Stanley, JPMorgan & Chase, Bank Of America, Barclays, China Renaissance, China International Capital Corporation (CICC), Citi, HSBC, UBS, and Guotai Junan.

The Cyberspace Administration of China in July launched its investigation into Didi’s operations, which has yet to turn out an official conclusion. The investigators installed at Didi’s Beijing headquarters had not been seen in the last two months, according to employees.

Didi reported a 30.4 billion yuan (US$4.77 billion) loss and a 1.7 per cent decline in revenue to 42.7 billion yuan in the third quarter of 2021.

With additional reporting by Coco Feng in Beijing

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