Didi Pays $740 Million to Settle Lawsuit Over US IPO

Didi Global Inc. agreed to pay $740 million to settle a shareholder lawsuit targeting the handling of its turbulent 2021 IPO, swallowing a one-time charge that pushed China’s ride-hailing leader into the red.

The company disclosed the settlement Thursday alongside quarterly results. Didi recorded a loss of 2.5 billion yuan ($351 million) for the June quarter, versus a profit of 854 million yuan a year earlier. Revenue grew 11% to 56.4 billion yuan, driven by the increase of transactions on its platform.

Known as China’s answer to Uber Technologies Inc., Beijing-based Didi debuted in New York in 2021 to much fanfare. But it almost immediately drew regulatory scrutiny from the powerful Cyberspace Administration of China, which opened a probe into its data security practices before suspending its app. Didi ultimately delisted from the mainboard.

The lawsuit in question focused on whether Didi had prior knowledge of the scrutiny and potential risks. Chinese regulators had asked Didi months before to delay its IPO because of national security concerns involving its huge trove of data, Bloomberg News reported at the time.

“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 said in its statement.

Didi’s shares now trade over-the-counter in New York and remain significantly below its IPO price of $14. The company aims to list on the Hong Kong stock exchange, though the timeline remains uncertain.

Since its delisting, the company has focused on reviving growth in a difficult economy. Average daily transactions in China reached 37.1 million, a new high, in the June quarter.