The shareholder approval clears the way for the company to work with Chinese regulators, who are demanding a review of its data systems. This would allow the company to start preparing for a Hong Kong IPO, the best outcome investors have said they can hope for.
Didi’s biggest shareholders, including SoftBank, Tencent Holdings and Uber Technologies, have seen Didi’s shares fall nearly 90% since it went public, when it was valued at around $80 billion. Following the delisting, the company’s shares are likely to be traded on the so-called “pink sheet” OTC market, where low-cost stocks and other riskier companies are found.
Some investors may be forced to sell because their mandates do not allow them to hold unlisted shares. Hedge funds already cut their holdings in Didi by 29%, to $231.9 million, during the first quarter, according to a Bloomberg analysis of filings. Even those free from such mandates, such as SoftBank, may question whether the shares are worth holding given uncertainty over punishment from Beijing, increased competition from smaller rivals and stagnant growth abroad.
It is not yet clear what actual punishment awaits Didi, who has been in talks with the Cyberspace Administration of China about a fine and other sanctions.
Didi shareholders, which also include the likes of Fidelity Investments and Blackrock, have so far avoided commenting on the delisting.
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