US senators call for inquiry into Didi Chuxing’s US$4.4 billion IPO following China’s crackdown
- Two members of the Senate banking committee said the SEC should review whether the ride-hailing giant misled investors
- Didi’s shares have lost more than US$24 billion in market capitalisation since Chinese regulatory actions began last week
Senator Bill Hagerty, a Tennessee Republican, and Senator Chris Van Hollen, a Maryland Democrat, separately said America’s top securities regulator should conduct an investigation into statements made by the operator of China’s dominant ride-hailing app ahead of its June 30 debut.
“American investors need confidence that the companies that list on US exchanges are not engaging in fraud and should have access to information on the risks posed by investing in foreign companies – especially those influenced by foreign governments,” Van Hollen said in a statement.
02:21
China’s blooming podcast industry walks a fine line between censorship and new narratives
Hagerty, a China hawk, said the SEC should examine whether Americans were misled, adding on his official Facebook page: “Communist China is not our ally. We must continue to hold them accountable.”
The Van Hollen and Hagerty statements were reported earlier by CNN and The Financial Times.
Didi’s IPO was the biggest by a Chinese company on an American bourse since e-commerce giant Alibaba Group Holding, the owner of the Post, raised US$25 billion in 2014.
The rapid-fire action by Chinese regulators in the past week has unnerved American investors, particularly those who gobbled up shares of Didi, the Chinese equivalent of Uber Technologies.
Didi has declined to make further comment in the days since that announcement.
The company’s biggest investors have also remained largely silent since the news first broke a week ago.
Uber, which sold its China business to Didi in 2016 and now holds an 11.9 per cent stake, did not respond to a request for comment on Friday.
Alibaba, another shareholder, did not immediately respond to a request for comment on Friday.
The full roster of the company’s investors may not be known for days or weeks as US reporting rules give investors up to 10 days to report if they own more than 5 per cent of a public company. Hedge funds have up to 45 days after their quarter ends to disclose their qualified holdings.
A number of exchange-traded funds (ETFs), index providers and investment managers also joined Didi’s shareholder ranks following the IPO.
“It’s definitely spooked investors. Uncertainty: investors definitely don’t like,” said Kevin Carter, chief investment officer and founder of the Emerging Markets Internet & Ecommerce ETF, known as EMQQ. “The Chinese government is a scary thing to US investors in general, which I think is unfortunate, but something I’ve learned to live with.”
Didi is EMQQ’s 10th largest holding, worth about US$50 million. The ETF acquired the shares on Tuesday, as it holds emerging markets internet companies that meet its criteria and fast-tracks IPOs of companies with a US$10 billion market cap after three days.