Ximalaya, the country's top podcast and audio app operator which aimed to go public in New York as soon as this month, has recently been pushed by China's regulators, including the Cyberspace Administration of China (CAC), to withdraw the listing plans and go public in Hong Kong instead, they said.
The privately-owned company, backed by tech majors Tencent, Xiaomi, Baidu as well as Sony Music Entertainment, is still in talks with the CAC, the sources said.
It will make a final decision about the listing venue within the next two weeks, they added.
The CAC and Ximalaya did not respond to requests for comment.
Shanghai-based Ximalaya, which filed publicly for the U.S. IPO in late April, has started pre-marketing the float since early May and looked to raise about $500 million, said two of the sources.
The potential change of venue comes as China further tightens its ideological grip on private media and internet businesses amid China-U.S. tensions.
China's ruling Communist Party (CCP) has long maintained a tight grip over ideology and propaganda, especially over state media which it can use to assert its authority.
"Domestic regulators have become more uncomfortable with Chinese media, content firms which operate in the country and obtain voluminous user data, but are incorporated offshore and now seek overseas listings," one of the sources said.
Another of the sources said that the Ximalaya move also comes amid Beijing's growing concerns that U.S. regulators will potentially gain greater access to audit documents of Chinese companies listed in New York, notably those that involve massive user or national data.
In March, the U.S. securities regulator began a rollout of rules that would exclude foreign companies from U.S. exchanges if they do not comply with U.S. auditing standards.
"The CAC thought Hong Kong would be better for ideological platforms such as Ximalaya," said a third person.
Goldman Sachs and Bank of America ,two underwriters on Ximalaya's IPO, declined to comment. The other underwriters Morgan Stanley and CICC did not respond to requests for comment.
Ximalaya had about 250 million monthly active users, nearly a fifth of China's population, in the first quarter of 2021, according to its IPO prospectus. It offers users a platform to access free or paid content from roughly 5.2 million professional or amateur content creators.
(Reporting by Hong Kong Newsroom; Additional reporting by Beijing Newsroom; Editing by Sumeet Chatterjee and Jane Merriman)