After Didi’s failure, Chinese fitness app withdrew its New York IPO plan

China’s most popular fitness app withdrew from its plan to apply for an initial public offering in the United States last week after Chinese regulators announced Investigate Didi’s data security issues, Online car-hailing group.

According to two people familiar with the matter, Keep, which is backed by Japan’s SoftBank and China’s Tencent and is expected to raise up to US$500 million, did not make a public declaration as planned, and Morgan Stanley’s bankers cancelled a marketing meeting with investors this week. this matter.

This move is one of the first signs that Didi and other US-listed Chinese companies may have data security vulnerabilities, including ride-hailing app Full Truck Alliance and online recruitment company Boss Zhipin, which may affect billions of dollars in technology Listed. It is planned to be held in New York this year.

According to people familiar with the matter, China’s largest podcasting platform Himalaya has also cancelled its US IPO in recent weeks. “After communicating with relevant regulators, Himalaya learned that the Hong Kong listing will be regarded as the preferred result,” the person said. The company issued a prospectus in April.

At the same time, according to people familiar with the matter, Chinese medical data solutions provider LinkTech this week shelved its IPO plan on Nasdaq. According to Reuters, the company will price its shares on Thursday and is expected to raise more than $200 million in funding.

On Tuesday, Beijing said it would Tighten restrictions The progress of Chinese companies’ overseas listings may threaten Wall Street’s stocks worth more than US$2 trillion.

This comprehensive announcement indicates that it will become more difficult for Chinese companies to list in the United States, triggering The sell-off of Chinese technology stocks. China is worried about whether citizens’ data will be provided to foreign governments as part of the list.

A partner at a US law firm that advises on China’s IPO said the transaction channel will come to a standstill. “Any transaction must be completed at a huge discount, because regulators have shown that they are willing to effectively prevent the company from developing.”

Keep and SoftBank declined to comment on the IPO plan. Earlier this year, in the latest round of financing led by the SoftBank Vision Fund, Keep was valued at approximately US$2 billion. Its investors also include Tencent and Hillhouse Capital. By providing indoor exercise programs and selling home fitness equipment during the pandemic, its value has been enhanced.

Keep’s move is the latest blow to SoftBank, which is Didi’s largest shareholder, holding approximately 20% of its shares. After China’s National Internet Information Office disclosed its investigation of Didi and ordered it to stop new registrations for its apps, SoftBank’s stock fell 5%. SoftBank is also an investor in the All Truck Alliance, which is also one of the US-listed technology companies under investigation by the Chinese data regulator.

Kirk Boodry, a technical analyst at Redex Holdings, said that the investigation of Didi has raised new questions about the Vision Fund’s other large investments in China, such as TikTok’s parent company Bytedance. “Relatively speaking, this may reduce China’s attractiveness to the rest of the world,” he added.

Additional reporting by Kana Inagaki in Tokyo and Christian Shepherd in Beijing

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