Didi blocks employees from selling shares indefinitely

Didi Chuxing has barred employees from selling shares in the company indefinitely, dealing a blow to staff of the Chinese ride-hailing group that has come under intense regulatory scrutiny after its listing in New York.

Monday was supposed to mark the end of a 180-day period during which current and former staff were not permitted to sell shares, but the prohibition has been extended without a new end date being set, according to people familiar with the matter.

The change marked the latest setback at the group, which has lost 60 per cent of its value, or about $38bn in stock market capitalisation, since its $4.4bn initial public offering in New York in June.

Chinese authorities launched an investigation into Didi’s data security practices days after the company went public and the group announced this month that it would delist in the US and pursue a listing in Hong Kong.

The company’s shares fell about 5.2 per cent in New York on Monday, wiping almost $1.5bn from its market capitalisation.

The company remains unable to sign up users and China’s cyber space regulator ordered app stores to remove 25 of its other apps, including those that register drivers.

Government data showed Didi’s ride count in China has declined since its apps were pulled from online stores, with passenger rides in November down 11 per cent compared with October.

Didi employees said morale at the company was low and they were waiting for authorities to announce the results of their probe.

“There are definitely going to be a lot of disappointed people with this,” said Li Chengdong, head of ecommerce think-tank Haitun.

“If you’ve grinded for three or four years and now there’s no date set for the Hong Kong IPO . . . probably for some employees they won’t want to wait any longer, maybe they will leave,” he said.

Current and former Didi employees will not be able to sell shares until after the company had successfully started trading in Hong Kong, one person familiar with the situation said.

However, one former staffer on the operations team said he was not bothered by the delay. “I wasn’t planning on selling at these prices anyway,” he said. “It’ll go back up someday.”

Didi did not respond to a request for comment.

Didi’s big investors were still able to start selling their shares on Monday. These included SoftBank’s Vision Fund, Didi’s single largest shareholder, which paid $11.8bn for a 20.1 per cent stake in the company 2019.

That stake is now worth $5.4bn, and Didi’s mounting problems have weighed on the Japanese tech group’s share price.

SoftBank did not respond to a request for comment.

Uber, the US ride-hailing group and a significant shareholder in Didi after merging its Chinese operations into the group in 2016, has indicated that it would gradually sell down its stake.

Other Didi investors include Chinese tech groups Tencent and Alibaba, Apple and dozens of venture capital firms.

Chinese media outlet LatePost first reported the extension of the lock-up period for Didi employees.

Additional reporting by Eli Meixler in Hong Kong