After techlash, China eyes stake in private company – Times of India
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Beijing’s municipal government has proposed an investment in Didi Global that would give state run firms control of the world’s largest ride-hailing company, according to people familiar with the matter.
Under the preliminary proposal, Shouqi Group — part of the influential Beijing Tourism Group — and other firms based in the capital would acquire a stake in Didi, the people said, asking not to be identified discussing private information. Scenarios under consideration include the consortium taking a so-called “golden share” with veto power and a board seat, they added.
Didi said on Saturday that it was working with regulators on a cybersecurity review and reports about a Beijing-led investment are untrue. The company’s US-traded shares spiked 7.5% on Friday morning in New York. The stock has declined 36% this year.
It’s unclear how large a stake the city is eyeing and whether its proposal will be approved by senior government officials. Didi is currently controlled by the management team of co-founder Cheng Wei and president Jean Liu. SoftBank and Uber are Didi’s biggest minority shareholders.
The Beijing municipal party committee press office didn’t respond to a request for comment, while calls to Shouqi went unanswered. And the Beijing Tourism group didn’t reply to a request for comment.
Local governments have traditionally had a big say in the restructuring of companies on their turf, and the envisioned solution dovetails with Chinese President Xi Jinping’s priorities of redistributing wealth and curbing the influence of the internet sector. The city’s proposal could entail taking a sizeable slice of Didi or a nominal stake accompanied by a golden share and board seat, the people said. The latter model would be akin to an earlier investment by the government in ByteDance’s Chinese unit, which gave the state entity veto-rights over important decisions.
The takeover proposal comes alongside a swath of penalties Xi’s administration is considering for the country’s ride hailing leader, which debuted in New York in June over the objections of the Cyberspace Administration of China. It’s since been ensnared by probes into data security and the way it treats its millions of drivers. Many of the options Beijing is weighing involve re-asserting state control over a company that’s traditionally operated in a legal grey zone.
Under the preliminary proposal, Shouqi Group — part of the influential Beijing Tourism Group — and other firms based in the capital would acquire a stake in Didi, the people said, asking not to be identified discussing private information. Scenarios under consideration include the consortium taking a so-called “golden share” with veto power and a board seat, they added.
Didi said on Saturday that it was working with regulators on a cybersecurity review and reports about a Beijing-led investment are untrue. The company’s US-traded shares spiked 7.5% on Friday morning in New York. The stock has declined 36% this year.
It’s unclear how large a stake the city is eyeing and whether its proposal will be approved by senior government officials. Didi is currently controlled by the management team of co-founder Cheng Wei and president Jean Liu. SoftBank and Uber are Didi’s biggest minority shareholders.
The Beijing municipal party committee press office didn’t respond to a request for comment, while calls to Shouqi went unanswered. And the Beijing Tourism group didn’t reply to a request for comment.
Local governments have traditionally had a big say in the restructuring of companies on their turf, and the envisioned solution dovetails with Chinese President Xi Jinping’s priorities of redistributing wealth and curbing the influence of the internet sector. The city’s proposal could entail taking a sizeable slice of Didi or a nominal stake accompanied by a golden share and board seat, the people said. The latter model would be akin to an earlier investment by the government in ByteDance’s Chinese unit, which gave the state entity veto-rights over important decisions.
The takeover proposal comes alongside a swath of penalties Xi’s administration is considering for the country’s ride hailing leader, which debuted in New York in June over the objections of the Cyberspace Administration of China. It’s since been ensnared by probes into data security and the way it treats its millions of drivers. Many of the options Beijing is weighing involve re-asserting state control over a company that’s traditionally operated in a legal grey zone.
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