September 27, 2022

China’s ride-hailing giant Didi Global as it seeks to delist from New York has announced its plans to list its shares in Hong Kong via a mechanism that will allow it to do so without the need to raise capital or issue new stock.

Didi has announced itself to move towards withdrawing from the New York Stock Exchange under pressure from Beijing. The company had run foul of Chinese authorities earlier this year by pushing ahead with an initial public offering (IPO) in New York despite being asked to put it on hold as regulators conducted a review of its data practices.

According to sources, Didi would be using the Hong Kong mechanism, known as ‘listing by introduction’. This mechanism would allow owners of the company’s U.S. shares to transfer them to the new bourse gradually.

The ride-hailing company is aiming to file for the Hong Kong listing by end-April and list by June.

While the plans are reportedly being prepared six months after the company made its debut in New York after raising $4.4 billion in a conventional IPO.

Earlier this month, the company had announced its plan to delist from the U.S. bourse and rather pursue a Hong Kong listing.

About ‘listing by introduction’ mechanism –

Companies ‘listing stock by introduction’ in Hong Kong, unlike typical IPOs meant that it need not raise capital and issue no new shares. The mechanism was popular in the past among companies that were looking to build a brand in Greater China and Hong Kong particularly.
According to the sources, Didi has picked China Construction Bank International (CCBI), China Merchants Bank International (CMBI), and U.S Goldman Sachs to manage the upcoming Hong Kong listing process.

This month, a Reuters report mentioned that Didi before embarking on the New York delisting had planned to hire Goldman to work on the upcoming Hong Kong listing. The company had also asked the bank to come up with proposals on how the listing and delisting would work out.

Goldman Sachs along with JPMorgan and Morgan Stanley were one of the main underwriters of Didi’s New York IPO.