Medical Data Firm LinkDoc Scrubs U.S. IPO as China Crackdown Continues

Alibaba-backed medical data firm LinkDoc Technology Ltd. has pulled a planned U.S. IPO as the fallout from China’s crackdown on data-rich companies listing overseas continues.

A spokesperson for Tiger Brokers, one of the underwriters of the Linkdoc deal, confirmed the listing had been suspended, telling Caixin that Tiger customers who had signed up to buy the shares had been notified.

LinkDoc is the first company known to have pulled out of a U.S. listing since a Chinese regulator announced national security and cybersecurity probes of three freshly listed Chinese technology firms this month, including ride-hailing giant Didi.

LinkDoc was slated to price its offering on Thursday, aiming to raise as much as $211 million. Morgan Stanley, Bank of America Corp. and China International Capital Corp. were arranging the deal.

The delay comes after the general offices of China’s ruling Communist Party and State Council published a document Tuesday announcing tightened scrutiny of domestic companies’ overseas share sales and data security.

The document pledged to step up oversight of cross-border data flows, a long-running policy trend which is likely to create additional hurdles for private Chinese firms operating and listing overseas. China will toughen laws and regulations on the management of confidential information and hold publicly traded companies accountable for keeping their data secure, it said.

The planned rule changes would allow regulators to block a Chinese company from listing overseas even if the unit selling shares is incorporated outside China, closing a loophole long-used by the country’s technology giants.

Chinese technology stocks were routed after the announcement, continuing a trend that has seen some $823 billion wiped from their market value since a February peak, amid a raft of regulatory hits spanning financial risk, privacy, antitrust, and now national security.

Shares of Didi Global Inc. plunged this week after the Cyberspace Administration of China (CAC) first announced a probe of the firm’s national security and cybersecurity risks, and then ordered the ride-hailing giant’s app to be removed from local app stores, all within days of its $4.4 billion U.S. IPO.

On Monday the probe widened to online recruitment platform Boss Zhipin, run by Kanzhun Ltd., and Yunmanman and Huochebang — two truck-booking apps run by Full Truck Alliance Co. Ltd. — which it ordered to stop registering new users.

CAC has made no specific allegations about the firms, all of which listed on U.S. bourses in recent weeks. But it marks the first time the nation’s year-old cybersecurity review measures have been publicly enacted. Those measures, which came into force on June 1 last year and are backed by China’s National Security Law and its Cybersecurity Law, empower it to probe firms deemed to operate “critical information infrastructure.”

Nicolas Bahmanyar, a data privacy consultant at Leaf Law Firm, said it was still unclear which private companies might be defined by the regulator as operating “critical information infrastructure” for the purpose of such reviews. “It’s a black box,” he said.

But the crackdown on Didi, given the size of the company, was “sending the signal that any tech company or data-rich company, as soon as they’re going to reach a certain critical mass, will be under very harsh scrutiny” if they seek an overseas listing.

LinkDoc, founded in 2014, provides cancer-focused health care services built on big data and artificial intelligence, according to its IPO prospectus. Its investors include Alibaba Health Information Technology Ltd., MBK Partners, New Enterprise Associates and Temasek Holdings Pte.

A representative for LinkDoc declined to comment.

Bloomberg contributed to this story.

Contact reporter Flynn Murphy (flynnmurphy@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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