China’s most popular fitness app has announced plans to introduce a first public offering in the United States last week while Chinese regulators announced a investigation into data security issues in Didi, a ride-hailing group.
Keep, which is backed by SoftBank of Japan and Tencent of China and is expected to raise up to $ 500 million, did not move forward with its planned public presentation while its Morgan Stanley bankers canceled marketing meetings. with investors this week, according to two people who know the matter.
The move is one of the first signs that the probe into possible data security breaches by Didi and other Chinese companies listed in the United States, including the truck app, Full Truck Alliance and online recruiter Boss Zhipin, will influence billions of dollars of technology ads. which are scheduled for New York this year.
Ximalaya, China’s largest podcasting platform, has also canceled its U.S. IPO in recent weeks, according to a person familiar with the company. “After communicating with the relevant regulators, Ximalaya understands that a Hong Kong listing would be considered as a preferred outcome,” the person said. The company had published a prospectus in April.
Meanwhile LinkDoc Technology, a Chinese medical data solution provider, unveiled its Nasdaq IPO plans this week, according to a person with knowledge of the matter. It has reached the price of its shares Thursday and is expected to raise more than $ 200m, it told Reuters.
On Tuesday, Beijing said it would tighten restrictions on the overseas list of Chinese companies in a development that could threaten more than $ 2tn of shares on Wall Street.
The general announcement, which indicated that the U.S. listing will become much more difficult for Chinese companies, sparked a sale in Chinese technology stocks. China is concerned about whether citizen data is made available to foreign governments as part of the list.
A colleague of a U.S. law firm that advised on Chinese IPOs said the pipeline of operations will stop. “Every deal should be made with a huge discount as regulators have shown that they are willing to effectively stop the company from growing.”
Keep and SoftBank declined to comment on the IPO plans. Keep was estimated at about $ 2 billion in its last round of financing, led by SoftBank’s Vision Fund, earlier this year. Its investors also include Tencent and Hillhouse Capital. Its value has been increased by providing internal training plans and selling equipment to exercise at home during the pandemic.
The Keep move is the latest blow for SoftBank, which is Didi’s largest shareholder with a stake of about 20 percent. Shares of SoftBank fell 5 percent after China’s Cyber Administration revealed the investigation into Didi and ordered it to plant new registrations in its app. SoftBank is also an investor in Full Truck Alliance, which is also among the technology companies listed in the United States that are being investigated by the Chinese watchdog.
Kirk Boodry, a technology analyst at Redex Holdings, said the probe into Didi raised new questions about the Vision Fund’s other major investments in China, such as the parent company TikTok ByteDance. “On a relative basis, it could make China less attractive to other parts of the world,” he added.
Additional reports from Kana Inagaki in Tokyo and Christian Shepherd in Beijing