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IPO

Alibaba-backed LinkDoc suspends US IPO as Didi fallout spreads

Medical data group worried by market volatility and fear of regulatory blowback

LinkDoc Technology offers medical data-related services to health care providers.    © Reuters

HONG KONG -- Chinese medical data group LinkDoc Technology has called off its U.S. initial public offering at the last minute, two people familiar with the transaction said, becoming the first casualty of Beijing's clampdown on overseas listings.

The company planned to raise up to $210 million on the tech-heavy Nasdaq exchange and closed its books on the deal on Wednesday after apparent strong demand.

However, market volatility, regulatory uncertainty and fear of angering Chinese regulators have prompted the company to cancel the offering, one of the people said.

Linkdoc, which is backed by Alibaba Health Information, had been due to price the deal today, determining how much money it would raise.

LinkDoc's move comes after the U.S. market debut of Chinese ride-hailing operator Didi Global, which raised $4.4 billion in one of corporate China's biggest New York IPOs in years, was rocked by intervention by Beijing.

China's cyberspace agency announced an investigation into Didi's handling of customer data and barred it from signing up new customers, sending its shares tumbling and wiping billions of dollars from its valuation just days after its listing.

Beijing later expanded its probe to two other companies that listed in the U.S. -- logistics company Full Truck Alliance and online recruiter Kanzhun. Chinese authorities also announced on Tuesday that rules for overseas listings will be revised and regulatory oversight of companies trading in offshore markets stepped up.

The gathering regulatory clampdown has led investors to shun Chinese stocks in the U.S. The Nasdaq Golden Dragon China Index, which tracks 98 Chinese companies listed in the U.S., has fallen 7.9% since the first salvo by the cyberspace agency. The S&P500 Index has risen 0.9% during the same time frame.

LinkdDoc, which was founded in 2014, filed for the IPO last month. On Wednesday, it updated its sale prospectus, flagging risks from Beijing's new directive about overseas IPOs.

Uncertainties exist on how soon "legislative or administrative regulation-making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated," it said.

The company, which provides cancer-focused health care services by relying on big data and artificial intelligence, had planned to sell 10.8 million shares priced between $17.50 and $19.50 each.

Thirty-six Chinese companies have held IPOs in the U.S. this year, raising a total of $12.6 billion, according to Dealogic. This marks the fastest start to a year ever recorded by the data provider and compares with six listings that raised $2.8 billion in the same period last year.

Analysts and bankers now expect U.S. IPOs by mainland companies to slump, at least in the short term.

Some 16 companies, including Alibaba-backed Chinese media and data cloud service platform Qiniu, housekeeping services company Daojia and ForU Worldwide, a digital freight transportation company, were looking to raise over $4 billion, people familiar with the transactions said.

Chinese fitness app Keep, which is backed by Japan's SoftBank and China's Tencent, halted plans to file for an IPO in the U.S. last week in the wake of the Didi investigation, the Financial Times reported Thursday.

Beijing has reportedly pressured podcast platform Ximalaya to halt plans to list in the U.S. in favor of Hong Kong due to data security concerns. The issue is also likely to be factored into keenly watched plans by ByteDance to list some or all of its businesses, such as TikTok.

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