Daojia Joins Little Red Book in Pausing U.S. IPO Plans
(Bloomberg) -- Daojia Ltd., a Chinese home service platform, is pausing its U.S. initial public offering plans as China stepped up scrutiny on overseas listings and cybersecurity, according to a person familiar with the matter.
The company, which filed publicly this month, isn’t going to start the first-time share sale anytime soon as it awaits more guidance from regulators, the person said. Daojia was initially looking to raise as much as $500 million from the share sale, the person added. The decision comes after China proposed a new policy that would require companies with over 1 million users’ data to submit to a cybersecurity review for overseas listings.
The startup would join Chinese social media and e-commerce platform Xiaohongshu, or known as Little Red Book, in setting its going-public ambitions aside following the fallout from the $4.4 billion U.S. IPO by China’s Didi Global Inc. Chinese regulators barred Didi’s software from local app stores and vowed to tighten scrutiny on foreign listings by domestic firms.
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Deliberations are ongoing and Daojia could still proceed with the IPO later, said the person, who asked not to be identified as the discussions are private. IFR reported the halt on Monday. A representative for Daojia declined to comment.
Daojia operates Swan Daojia, which is a platform providing services in China ranging from flower delivery and house repair to home cleaning and babysitting. Founded in 2014, the startup is backed by China’s Craigslist-equivalent 58.com Inc. and also counts Alibaba Group Holding Ltd., Ping An Ventures and KKR & Co. among its investors.
The company had a net loss of $26 million on revenue of $30 million in the first three months of 2021, according to its filings. The firm lost about $15 million for the same period last year. Daojia was planning to use the IPO proceeds for expansion and promotion of its services as well as for technology system upgrade.
JPMorgan Chase & Co., UBS Group AG and China International Capital Corp. are arranging the share sale.
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