There is a Wall Street Journal article saying that Didi is considering going private to “placate China and compensate investors“.

Chinese government will not allow it

Very interesting – while there is no doubt that Didi was probably discussing all the options to get out of the current crisis. We, however, find delisting highly unlikely.

It will be a slap on Chinese government’s face if it seems like that they are forcing a company like Didi to delist from US public market. Face is probably more important than compensating Didi’s investors, as far as the Chinese government is concerned.

Also, they will need some serious fundraising to ‘compensate’ investors, who have lost money on paper because of the recent price drops. That looks unlikely now – unlike the Chinese government is willing to fund it. But that is against what we just mentioned above.

More likely scenario

What we think is the more likely scenario: Didi has been exploring all options to get out of the current crisis, and delisting was one option discussed during its conversations.

However, there were probably many other options on the table or discussed about. It does not mean that delisting is the way they intend to pursue.

 

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.