Didi Global Inc., China’s leading ride-hailing platform, has agreed to pay $740 million to settle a shareholder lawsuit related to its tumultuous 2021 initial public offering (IPO), Bloomberg News reports. The settlement triggered a one-time charge that pushed the company into the red for the latest quarter.
The company disclosed the settlement alongside its quarterly earnings on Thursday, reporting a net loss of 2.5 billion yuan ($351 million) for the June quarter, compared with a profit of 854 million yuan in the same period last year. Revenue rose 11% to 56.4 billion yuan, fueled by increased transaction volumes on the platform.
Didi, often referred to as China’s answer to Uber Technologies Inc., made its New York debut in 2021 amid high expectations. However, the listing immediately drew regulatory scrutiny from China’s powerful Cyberspace Administration, which investigated the company’s data security practices and temporarily suspended its app. The probe ultimately led to Didi’s delisting from the mainboard.
The shareholder lawsuit centered on whether Didi had prior knowledge of the regulatory risks. According to Bloomberg, Chinese authorities had requested months before the IPO that the company delay its offering due to national security concerns over its extensive data collection.
In a statement, Didi said: “We deny any allegations of fault, liability, wrongdoing, or damages. We entered into the settlement to avoid the cost and disruption to our business development that could arise from further litigation.”
Didi’s shares currently trade over-the-counter in New York, well below the $14 IPO price. The company has signaled intentions to pursue a listing on the Hong Kong stock exchange, though the timeline remains uncertain.
Despite regulatory and market challenges, Didi has focused on regaining growth in a difficult economic environment. Average daily transactions in China reached a record 37.1 million in the June quarter, marking a new high for the platform.
