DIDI Global, the Chinese ride-hailing company, must face a lawsuit in a US court claiming it defrauded investors by concealing and disobeying a Chinese government order to postpone its 2021 initial public offering until it resolved cybersecurity and privacy concerns.
In a 54-page decision on Thursday, US District Judge Lewis Kaplan in Manhattan federal court said investors who brought the proposed class action sufficiently pleaded that Didi and various officials intended to defraud them in raising more than US$4.4 billion in the June 30, 2021 IPO.
The offering valued all of Didi at about US$67.5 billion.
Kaplan said the alleged desire to sell American depositary shares before a looming government crackdown on Chinese technology companies gave Didi and the officials a “concrete and personal economic motive” to go public before “the window for high valuation Chinese IPOs in the United States” closed.
Lawyers for Didi did not immediately respond to requests for comment. The investors’ lawyers did not immediately respond to similar requests.
Kaplan also refused to dismiss claims against banks that helped Didi go public.
Shares of Didi tumbled in July 2021 as China’s cyberspace regulator, the Cyberspace Administration of China, banned it from registering new customers and required the removal of the Didi Travel app from smartphone app stores.
Didi announced plans in December 2021 to delist the US-listed shares. The regulator fined Didi US$1.2 billion the following July over the episode.
Didi’s market value is now about US$19 billion, according to LSEG data.
