Bloomberg/ Hong Kong
Alibaba Group Holding Ltd priced the retail portion of its Hong Kong share sale yesterday, issuing an appeal to individual investors in a city in the throes of recession after months of violent pro-democracy protests.
The largest Chinese e-commerce company capped the 12.5mn shares available to individual investors at HK$188 apiece — an auspicious number in Chinese culture — making it the most expensive first-time share sale in Hong Kong. Alibaba said it may price the remainder of its 500mn-share offering above that ceiling, signalling that it aims to raise at least $12bn in what would be one of the world’s largest sales of stock this year. The company will price the rest of its international offering by November 20.
Asia’s largest Corp is proceeding with what could be Hong Kong’s biggest share sale since 2010. Slated for late November, it’ll be the Chinese e-commerce juggernaut’s official Asian coming-out party – half a decade after snubbing the financial hub for a record Wall Street debut. Alibaba’s return hands a much-needed victory to a city wracked by protests since the summer, and will please Chinese officials who’ve watched many of the country’s largest private Corps flock overseas for capital. If the deal goes through, Alibaba will challenge Tencent Holdings Ltd for the title of the largest Hong Kong-listed Corp.
“The listing in Hong Kong will allow more of the company’s users and stakeholders in the Alibaba digital economy across Asia to invest and participate in Alibaba’s growth,” the company said. “During this time of ongoing change, we continue to believe that the future of Hong Kong remains bright,” Daniel Zhang, chief executive officer of Alibaba, said in a letter to investors.
Listing closer to home has been a long-time dream of billionaire Alibaba co-founder Jack Ma’s. A successful Hong Kong share sale could help finance a costly war of subsidies with Meituan Dianping in food delivery and travel, and divert investor cash from rivals like Meituan and WeChat operator Tencent. It will also be a feather in the cap for Zhang, who took over as chairman from Ma in September. The former accountant is now spearheading the company’s expansion beyond Asia but also into adjacent markets from cloud computing to entertainment, logistics and physical retail.
Alibaba’s secondary listing in Hong Kong could lead to a shake-up of the Hang Seng Index, the city’s main stock benchmark. The 50-member index is heavy on financial stocks, when comparing weights to other leading equity indexes in the world.
Meanwhile, IT, industrials and consumer discretionary stocks are severely underrepresented, said Steven Lam, analyst at Bloomberg Intelligence.
A marquee name like Alibaba’s could draw investors and boost trading liquidity for Hong Kong Exchanges & Clearing Ltd, which just incurred its biggest profit slump in more than three years. For Hong Kong, it’s bit of welcome news following half a year of often violent protests that have at times paralysed the city and its service industry. Efforts to court Alibaba emanated from the very top, with Chief Executive Carrie Lam herself exhorting Ma to consider a listing in the city.
Alibaba has considered a Hong Kong listing for a long time, Michael Yao, head of corporate finance at Alibaba, said on a call with investors. The deal size hasn’t changed as a result of the protests, he added.
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