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China’s most popular fitness app withdrew plans to file an initial public offering in the United States last week, Chinese regulators announced research on data security issues in Didi, a travel group.
Keep, which is backed by Japan’s SoftBank and China’s Tencent and is expected to rise to $ 500 million, did not continue its planned public presentation as its Morgan Stanley bankers canceled marketing meetings with investors this week, according to two people familiar with the matter.
The move is one of the first signs that the investigation into possible data security breaches by Didi and other Chinese companies listed in the U.S., including the Full Truck Alliance app and online recruiter Boss Zhipin, may affect billions of dollars in technology listings. which are scheduled for New York this year.
Ximalaya, China’s largest podcast platform, also canceled its IPO in recent weeks, according to a person familiar with the company. “After communicating with the relevant regulators, Ximalaya understands that a listing in Hong Kong would be considered a preferred outcome,” the person said. The company had issued a pamphlet in April.
Meanwhile, LinkDoc Technology, a Chinese medical data solution provider, set aside its Nasdaq IPO plans this week, according to a person familiar with the matter. He was due to set the price of his shares on Thursday and was expected to raise more than $ 200 million, Reuters reported.
On Tuesday, Beijing said yes tighten restrictions on listings of Chinese companies overseas in a development that could threaten stocks worth more than $ 2 million on Wall Street.
Such a broad announcement, which indicated that quotes in the US would be much more difficult for Chinese companies, has triggered a sale in Chinese technology stocks. China is concerned about whether citizen data is made available to foreign governments as part of the listings.
A partner at a U.S. law firm that has advised on Chinese IPOs said the line of agreements would be stopped. “Any deal should be made at a huge discount, as regulators have shown they are willing to effectively stop the company from growing.”
Keep and SoftBank declined to comment on the IPO plans. Keep was valued at about $ 2 billion in its latest round of financing, led by SoftBank’s Vision Fund, earlier this year. Its investors also include Tencent and Hillhouse Capital. Its value has increased by providing indoor training plans and selling equipment to exercise at home during the pandemic.
The Keep move is the latest hit from SoftBank, which is Didi’s largest shareholder with a 20% stake. Shares of SoftBank fell 5% after the China Cyber Administration revealed the investigation into Didi and ordered it to stop new records in its application. SoftBank is also an investor in the Full Truck Alliance, which is also part of U.S.-listed technology companies that is investigating the Chinese data surveillance dog.
Kirk Boodry, a technology analyst at Redex Holdings, said the research on Didi raised new questions about the Vision Fund’s other major investments in China, such as 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
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