China’s largest ride-hailing company Didi Chuxing’s shares dropped by 5.3 per cent on Friday (2 July), after the Cyberspace Administration of China (CAC) announced to launch a cybersecurity review of the firm.
CAC said the investigation on the company—which has nearly 500 million users and 15 million drivers—is to protect “national security and the public interest”, prompting Didi’s share price to drop to $15.53.
A spokesperson from Didi told CNBC on Friday that it will give full cooperation for the review, adding that the company will conduct a “comprehensive examination” of cybersecurity risks and continue to improve its cybersecurity systems and technology capacities.
China’s cyberspace regulator subsequently ordered app stores to stop offering Didi’s app on Sunday, noting that the firm has illegally collected users’ personal data.
“After checks and verification, the Didi Chuxing app was found to be in serious violation of regulations in its collection and use of personal information,” the CAC stated.
The company was required to make changes to comply with relevant laws and regulations.
Didi issued a statement on the same day, noting that the app can no longer be downloaded in China after it has been taken down from the country’s app stores, but existing users will not be affected.
“The Company will strive to rectify any problems, improve its risk prevention awareness and technological capabilities, protect users’ privacy and data security, and continue to provide secure and convenient services to its users,” it stated.
However, Didi noted that the app takedown could hurt its revenue in China.
“Apart from the suspension of new user registration in China that was previously announced on July 2, 2021, and the app takedown in China as announced in this release, DiDi maintains normal operations globally,” it added.
Temasek Holdings express interest to buy US$500 million worth of stock in Didi IPO
Didi was formed in 2015 when its founder and CEO Cheng Wei, who currently owns a 7 per cent stake in the company, merged the company with Kuaidi Dache. Didi acquired Uber China in 2016.
According to Fortune’s report, Didi’s largest shareholder is Japanese investment giant SoftBank, who holds a 21.5 per cent stake, followed by Uber with a 12.8 per cent stake, and Tencent which holds a 6.8 per cent stake.
It was noted that Alibaba and Apple have also invested in Didi, both of which have executives on the company’s board. Didi’s president Jean Liu owns a 1.7 per cent stake in the company.
Business Times reported in June that the company is looking to raise up to US$4 billion in New York initial public offerings.
According to a regulatory filing, Didi aims to offer 288 million American depositary shares for US$13 and US$14 apiece, and at the high end, the company would have a market value of about US$67 billion.
It was also stated that Singapore’s Temasek had indicated interest to buy US$500 million worth of stock in Didi IPO, while Morgan Stanley Investment Management has planned to buy up to US$750 million worth of stock.