We Doctor faces data queries from HKEX ahead of Hong Kong IPO

[HONG KONG] We Doctor Holdings is fielding queries about its data governance from Hong Kong Exchanges and Clearing (HKEX) as the Chinese health-care startup pursues an initial public offering in the city, according to people familiar with the matter.

The bourse operator is asking for assurances from the Tencent Holdings-backed company that its data handling practices comply with China's rules, the people said, asking not to be identified as the information is not public.

The company has been in talks with China's cybersecurity watchdog about its data and is working to provide a written record of the discussion to prove it is in compliance with the rules, the people said.

We Doctor had been looking to raise as much as US$3 billion in its IPO, which would make it one of the biggest first-time share sales in the city this year.

The company, which filed in April, plans to supply HKEX with updated earnings and aims to list as soon as September, though the precise timing will depend on the exchange's approval as well as market conditions, the people said.

We Doctor declined to comment in an emailed statement.

Chinese companies looking to go public offshore now face heightened scrutiny over their data security practices after Beijing launched a cybersecurity probe into ride hailing giant Didi Global just days after its US$4.4 billion U.S. IPO.

Since then markets have swooned as the Chinese government unveiled proposals to more tightly supervise foreign offerings by its companies, including requiring firms with data on more than 1 million users to apply for cybersecurity approval before listing in another country.

A recent slump in technology shares has made Hong Kong's market much less receptive to IPOs in the sector. On Monday NetEase's music streaming unit put off taking investor orders for its planned US$1 billion IPO because of the volatility, people familiar with the matter have said.

Since the start of July, Hong Kong's Hang Seng Tech Index has shed 18 per cent, while We Doctor's rivals have also been hammered. Ping An Healthcare and Technology has dropped 25 per cent in the same period, while JD Health International has slumped 30 per cent.

China has been widening its campaign to rein in its internet giants, in an onslaught which at one point wiped out more than US$1 trillion of market value from the stocks of Chinese companies.

Investors have been fretting about which sector might be next, bringing valuations down because of the regulatory overhang.

We Doctor is a digital medical services platform that runs 27 so-called internet hospitals, integrating online and offline medical services, according to its preliminary prospectus.

The Hangzhou-based company's platform has about 25 million average monthly paying users.

We Doctor was valued at US$6.8 billion after its latest funding round at the end of 2020, Bloomberg News has reported.

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