World

Didi duo lose $1.5 billion as shares plunge on China’s crackdown

Bloomberg July 7 | Updated on July 07, 2021

Cheng Wei, co-founder and chief executive officer, saw his net worth drop by about $1.2 billion

The duo behind Didi Global Inc. lost $1.5 billion in wealth in two trading days as the Chinese ride-hailing giant’s shares plummeted in New York after Beijing cracked down on the company.

Cheng Wei, co-founder and chief executive officer, saw his net worth drop by about $1.2 billion, according to the Bloomberg Billionaires Index. Jean Liu, co-founder and president, shed about $300 million.

Didi’s American depositary receipts plunged 24 per cent over the period as China’s internet regulator opened a security review and then ordered stores to remove the Didi app. The State Council also issued a sweeping warning to China’s biggest companies, vowing to tighten oversight of data security and overseas listings.

Also read: Didi app suspended in China over data protection

The turmoil came just days after the Beijing-based company, which controls almost the entire ride-hailing industry in China, raised $4.4 billion in its initial public offering last week. It buffeted global investors and complicated the picture for investing in the country’s tech giants.

Chinese regulators’ concerns

Chinese regulators asked Didi as early as three months ago to delay its landmark US IPO because of national security concerns involving its huge trove of data, according to people familiar with the matter. Prior to that, China’s antitrust watchdog ordered Didi to halt practices including arbitrary price hikes and unfair treatment of drivers.

Didi handed a group of senior executives and board members stock options worth billions of dollars before the IPO, free from the usual four-year vesting restriction and with a strike price Didi described in regulatory filings as “nominal.”

Published on July 07, 2021

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