(Bloomberg) — The Beijing municipal government has proposed an investment in Didi Global (owner of 99 in Brazil), which would give state-owned companies control of the world’s largest transport app company, according to people with knowledge of the matter.
Under the preliminary proposal, Shouqi Group – part of the influential Beijing Tourism Group – and other companies based in the Chinese capital would buy a stake in Didi, said the people, who spoke anonymously. Among the options evaluated, the consortium would assume the so-called “golden share” with veto power and a seat on the board, they added.
It is not clear how much stake the city would have in Didi and whether the proposal will be approved by government officials. Didi is currently controlled by the management team of co-founder Cheng Wei and President Jean Liu, who received 58% aggregate voting power following the company’s initial public offering in the United States. SoftBank Group and Uber Technologies are Didi’s largest minority shareholders.
Didi representatives did not respond to a written request for comment. The Beijing municipal party committee press office did not respond to a faxed request for comment, while repeated calls to a number provided by Shouqi Group staff went unanswered. Beijing Tourism Group did not respond to a faxed request for comment.
Local governments have traditionally had great influence in restructuring companies in their territory, and the envisioned solution fits Chinese President Xi Jinping’s priorities of redistributing wealth and limiting the influence of the Internet sector. The city’s proposal could involve buying a sizable stake in Didi or a nominal stake accompanied by a golden share and a seat on the board, the people said. In the case of the nominal share, it would be similar to a previous investment made by the government in the Chinese unit of ByteDance, which gave the state entity veto rights over important decisions.
Didi – which was once praised for defeating Uber in China – has now become a test case in the Chinese government’s campaign to limit the power of Internet titans. Xi’s government, eager to promote its vision of sharing wealth or “common prosperity,” targets an Internet industry that has amassed wealth operating outside the law, created unprecedented numbers of billionaires, and enriched Chinese and foreign investors in the process. .
Didi’s controversial IPO on June 30 was the trigger for a new attack on Internet giants that, in addition to targeting unfair competition in online commerce, now include private online education and social networking, wiping out more than $1 trillion in market value of Chinese stocks. This campaign is in its 11th month, a turbulent period that has investors pondering the longer-term ramifications of cracking down on companies like Jack Ma’s Ant Group and Alibaba, and food delivery giant Meituan.
To date, Didi depends on a large number of cars and drivers without a technical license to operate around 25 million trips a day. On Thursday, the Ministry of Transport scared investors by warning that Didi and rivals must present plans to correct such violations by December, in the latest warning to shared-economy giants.
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