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Hello Inc. has cancelled its IPO plans and will no longer be going public in the US. The company owns Hellobike, a Chinese bike-sharing service backed by Jack Ma’s company, Ant Group. Learn more about Hello’s withdrawn IPO, and find out how else investors in Canada can back the company.
Note: All dollar amounts on this page are in US dollars unless otherwise stated.
On Tuesday, July 27, Hello Inc. announced it was withdrawing its registration with the US Securities and Exchange Commission (SEC) and would no longer be going public in the US. The move is believed to be due to increased SEC regulations that require China-based companies to disclose any risks related to the Chinese government interfering with their businesses.
You can view the withdrawal request that Hello Inc. filed with the SEC here.
Hello Inc. originally filed a draft registration with the US Securities and Exchange Commission on April 23, 2021. It planned to sell American Depository Shares (ADSs) on the Nasdaq under the ticker symbol “HELO.”
The company had hoped to raise around $100 million from the offering. Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and China International Capital Corporation Hong Kong Securities Limited were set to act as lead underwriters for the deal.
American Depositary Shares (ADSs) are equity shares of a non-US company held by a US depository bank. Generally, only US residents can have accounts with US depository banks. So, Canadians can’t buy stocks in a company if it’s only selling ADSs. This means that, even if Hello Inc. continued its plans to have an IPO in the US, investors in Canada wouldn’t be able to buy in.
Depository Banks are financial institutions that hold people’s assets (money, securities etc.) for safekeeping. Where stock trading is concerned, depository banks make it relatively safe and easy for US residents to buy stocks in foreign companies that trade on US exchanges like the NYSE or the Nasdaq. This is because a depository bank act as a custodian of stocks until they’re sold, after which it transfers the stocks between investors’ accounts.
Hellobike is one of China’s largest bike-sharing services. Around 183 million people used Hellobike in 2020, bringing in a cool CNY ¥13 billion (around CAD $2.4 billion). Although you can’t buy Hello Inc. stocks, you can invest in other short-distance transportation companies listed on stock exchanges in North America and around the world.
|Company||Description||Market Capitalization||Stock info|
|Uber Technologies, Inc.||Offers ride-hailing and delivery services and is a major investor in Lime Electric Scooter Rentals.||$82 billion||NYSE: UBER|
|Meituan Dianping||Bought one of the leading Chinese bike-sharing companies, Mobike, and renamed it to Meituan Bike.||$192 billion||OTC Markets, Pink Sheets: MPNGF|
|Lyft, Inc.||Offers vehicles for hire, motorized scooters and bike sharing services. Owns Citi Bike, a bike-sharing system based in New York City.||$15 billion||NasdaqGS: LYFT|
|Giant Manufacturing Co., Ltd.||Taiwanese bike manufacturer. In collaboration with the Taipei City Department of Transportation, it offers YouBike, a bike-sharing system in the capital city of Taipei.||$$113 billion||TWSE: 9921.TW|
|Stagecoach Group plc||Operates buses, express coaches and trams in the UK. Owns Megabus in the US.||$482 million||LSE: SGC.L|
You’ll need a brokerage account to buy and sell shares. Here’s how it works:
Agreements between Canada and the US require Canadians holding US stock investments to pay the US Internal Revenue Service (IRS) a 15% withholding tax on any dividends earned on their US stocks. Interest earned from bonds or other interest-yielding US investments are similarly taxed at a rate of 10%.
An exception is made for stock investments held in trust exclusively designed to provide retirement income. Such trusts include RRIFs, LIRAs, LIFs, LRIFs and Prescribed RRIFs. RRSPs are also exempt from US withholding tax if you own US investments in the form of US stocks, bonds or ETFs.
All income from investments, including foreign investments, must be declared as part of your income on your Canadian tax return. Unless your US earnings are exempt from withholding tax, this means you’ll be double taxed on those earnings — first by the IRS, then by the CRA. However, the CRA may allow you to claim foreign tax credits for any taxes you’ve already paid to the IRS.
Speak with a tax professional to find out what rules and exceptions apply to your circumstances.
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