Chinese social media and e-commerce startup Xiaohongshu, or “Little Red Book,” is putting its US initial public offering plans on hold after China tightened rules on overseas listings, according to people with knowledge of the matter.

The online platform, backed by Tencent Holdings Ltd. and Alibaba Group Holding Ltd., is discussing with advisers on alternatives as the company would likely be subject to a cybersecurity review under Beijing’s proposed policy for firms listing abroad, said the people. A listing in Hong Kong could be an option, the people said, who asked not to be identified as the information is private.

Xiaohongshu, which had filed confidentially for a US IPO earlier this year, was aiming to raise more than $500 million, one of the people said. Chinese on-demand logistics and delivery firm Lalamove is weighing an IPO venue switch from the US to Hong Kong, Bloomberg news reported this week.

Deliberations are ongoing and Xiaohongshu hasn’t made any final decisions on its IPO plans, the people said. A representative for Xiaohongshu didn’t immediately respond to requests for comment.

The fallout from the $4.4 billion US IPO by China’s Didi Global Inc. has thrown many listing plans into disarray, after Chinese regulators barred the company’s software from local app stores and proposed new rules for similar listing overseas. The regulations would require companies with over 1 million users’ data to submit to a cybersecurity review.

Xiaohongshu — which calls itself RED and stresses its name bears no relation to the seminal book of Mao Zedong’s quotations — was founded in 2013 as an online community that recommends overseas e-commerce sites for users in China. It later entered e-commerce and then evolved into a social media platform where users share their daily life moments through videos and pictures on topics including skincare, food and travel. The platform’s monthly active users breached 100 million as of October 2019 with about 70 percent of them born in the 1990s or later, according to its website.

By Bloomberg News

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