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(Bloomberg) -- Senior Chinese officials have pushed back on a set of proposed punishments for Didi Global Inc. submitted by the nation’s cybersecurity regulator, people familiar with the matter said, leaving the future of the troubled ride-hailing giant in limbo.
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Didi has been in talks with the Cyberspace Administration of China about a fine and other penalties after proceeding with a U.S. initial public offering last June over the regulator’s objections, the people said. The agency had aimed to publish the results of that probe in April but central government officials told the CAC they’re not satisfied with the proposed punishments and asked for revisions, the people said. The officials felt the remedies were too lenient, one person said, asking not to be identified because the matter is private.
That’s why Didi suspended plans for a Hong Kong listing, the people said, adding that it’s uncertain when that dispute could be resolved.
The result is that Didi, once the most celebrated startup in China, faces yet more uncertainty as it prepares to depart New York bourses under orders from Beijing. The company, once worth about $80 billion, will likely see its stock traded over the counter on the so-called pink-sheets market, home to penny stocks and other riskier businesses. Didi said last week it hadn’t applied to move to another exchange, surprising investors who anticipated a smoother transition.
Didi’s American depositary receipts dropped 9% to close at $1.71 Thursday in New York, and have declined about 88% since their trading debut on June 30.
Didi’s shareholders -- which include marquee names from Fidelity Investments to Blackrock Inc. -- have so far refrained from public comment on the delisting. The Chinese company briefed several investors on the potential relegation of its stock and at least one of them was unhappy with the latest development, one of the people said. Some investors could be forced to sell because their mandates don’t allow them to hold unlisted shares. Japan’s SoftBank Group Corp., which can hold unlisted stock and plowed more than $12 billion into the company, has seen its 20% stake fall from a peak of about $16 billion to less than $2 billion.
SoftBank shares slid as much as 4% in Tokyo trading.