Alibaba mulls listing in HK to raise US$20b

Source: Xinhua | 2019-05-29

Alibaba is considering raising as much as US$20 billion through a listing in Hong Kong, a report said yesterday, lining up a second blockbuster deal following its 2014 record US$25 billion float in New York.

US-listed Alibaba is working with financial advisers on the offering and is aiming to file an application in Hong Kong as early as the second half of 2019, Bloomberg News reported, quoting three unidentified people with knowledge of the plans as the plans are not public yet.

The deal, the biggest follow-on share sale in seven years globally, would give Alibaba a chest to keep investing in technology.

But a spokesman for Alibaba declined to comment.

Analysts said the context and geography could not be ignored. “For Chinese companies listed in the United States, one has to prepare a contingency plan,” said Hao Hong, head of research at broker BOCOM International. “Given most of the Alibaba investors are in Asia, it makes sense to come closer to your home base and give investors an option to trade in the same time zone.”

Sources with knowledge of Alibaba’s plans cautioned that many details were not yet clear, including the final planned size. One person with direct knowledge said it was more likely to be between US$10 billion and US$15 billion.

At US$20 billion, Alibaba’s deal would be the sixth-biggest follow-on share sale ever, Refinitiv data shows.

It would rank behind NTT’s 1987 US$36.8 billion sale, crisis-era offerings of US$24.4 billion and US$22.5 billion from the Royal Bank of Scotland and Lloyds Banking Group, and the US$20.7 billion raised by US insurer AIG in 2012.

The Japanese tech investor has a 28.8 percent stake, worth US$115.7 billion, in Alibaba after it sold a small part of its original holding via derivatives to fund its acquisition of chip designer ARM in a transaction that completes next month.

Since its US listing, Alibaba has nearly doubled in size to become the largest-listed Chinese company with a market value of more than US$400 billion.

A Hong Kong listing would give mainland investors their first direct access to one of China’s biggest success stories, via the stock connect trading link between Hong Kong, Shanghai and Shenzhen.

It would also give the company an extra pocket of liquidity and potentially a better valuation if the household name became a favorite among retail investors in Hong Kong.