securities regulator in March began rolling out new regulations that could see Chinese companies delisted if they do not comply with U.S. “It’s a clear signal that the Chinese government is not particularly happy that these firms continue to decide to raise capital in the west,” said Jordan Schneider, a technology analyst at research firm Rhodium Group.
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The CAC also announced probes into Kanzhun Ltd’s online recruiting app Zhipin and truck hailing company Full Truck Alliance. The stock fell for third consecutive session on Wednesday, ending down 4.6%. since e-commerce giant Alibaba Group raised $25 billion in 2014.įor investors, the euphoria was shortlived, with Didi’s shares diving nearly a third since its debut on June 30. It was the largest Chinese IPO in the U.S. The broader regulatory clampdown and Didi’s listing dustup drove the S&P/BNY Mellon China Select ADR Index, which tracks the American depositary receipts of major U.S.-listed Chinese companies, down 3.4% on Tuesday.Ĭatching many investors, and Didi, off-guard, the Cyberspace Administration of China ( CAC) on Sunday ordered the ride-hailing firm to remove its apps from app stores in China for illegally collecting users’ personal data, less than a week after it made its debut on the New York Stock Exchange following its $4.4 billion initial public offering. “Overseas-listed Chinese companies may have had the mistaken impression that it can ignore Chinese regulators just because they are not listed in China,” Lau, whose company holds Chinese stocks, told Reuters. “The message is that for a successful overseas listing, Chinese regulators must be involved, as well as international cooperation with overseas regulatory bodies,” said Louis Lau, California-based Brandes Investment Partners’ director of investments. capital markets have been a lucrative source of funding for Chinese firms in the past decade, especially for technology companies looking to benchmark their valuations against listed peers there and tap an abundant liquidity pool.Ī record $12.5 billion has been raised so far in 2021 in 34 offerings from listings of Chinese firms in the U.S., Refinitiv data shows, well up from the $1.9 billion worth of new listings in 14 deals in the year-ago period.Īnalysts say China’s moves to look more closely at firms venturing overseas add a new layer of uncertainty for firms already struggling to navigate escalating tensions between Beijing and Washington over a broad range of issues. “…The stakes are extraordinarily high, for both the tech companies and for China as a country.” market is off limits, at least for now,” said Hu, whose private equity firm’s portfolio include a number of tech companies that have gone public overseas. will have to pause, or even abandon the plans altogether, in the face of mounting uncertainties and confusions,” said Fred Hu, chairman of Primavera Capital Group. “It suffices to say those Chinese companies already planning to list in the U.S. On Tuesday Beijing said it would strengthen supervision of all Chinese firms listed offshore and tighten rules for cross-border data flows, a sweeping regulatory shift that is also set to weigh on the long-term valuations of the IPO-bound companies, they said.īankers and investors expect the pace of activity to slow in the near-term as investors grapple with Beijing’s decision to tighten supervision of firms listed offshore, coming just days after regulators stunned investors by launching a cybersecurity investigation into Didi. HONG KONG/NEW YORK -China’s stepped-up scrutiny of overseas listings by its companies and a clampdown on ride-hailing giant Didi Global Inc soon after its debut in New York have darkened the outlook for listings in the United States, bankers and investors said.
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