HONG KONG: Chinese e-commerce giant Alibaba Group is poised to launch a Hong Kong share sale expected to raise up to US$13.4bil as soon as today, according to two sources with knowledge of the discussions.
The deal – which would be the world’s biggest cross-border secondary listing – will be seen as a boost for Hong Kong, which has sunk into its first recession in a decade as more than five months of street protests and worries about the US-China trade war took their toll.
While Alibaba executives are preparing for a launch today, another source said the timing could slip depending on developments in the protests.
All three sources declined to be identified because the information was not yet public.
An Alibaba spokeswoman declined to comment on the company’s listing plans.
It had been planning to sell the shares earlier this year but in August postponed the deal as the anti-government protests rocking the city since June became increasingly violent.
The third source said Alibaba was confident that the company could overcome the negative sentiment in Hong Kong financial markets caused by the demonstrations.
The deal had been initially expected to raise up to US$15bil, but the source said the company would sell up to 500 million primary shares in the listing. Including a typical “greenshoe”, or overallotment option, to sell some extra shares, the sale could raise up to US$13.4bil.
A sale of that size will dilute existing shareholders by 2.8% and investors will be able trade shares between the two exchanges, the source said.
Its Hong Kong shares are expected to be offered at a discount of up to 5% of the US equivalent. At US$13.4bil, Alibaba’s share sale would be the city’s largest in more than nine years, and would rank as the world’s largest follow-on share sale targeting an entirely new stock exchange, according to data from Dealogic.
Alibaba holds the world record for an initial public offering with its 2014 US$25bil New York float, but could shortly lose the crown to Saudi Arabia’s Aramco. The oil producer is expected to raise between US$20bil and US$40bil in an IPO expected to price in the coming weeks.
Alibaba has not yet said what it plans to do with the new funds. However, the company has been looking to expand its Chinese customer base beyond its core market in big cities to less developed areas to combat slowing retail sales growth.
On Monday, the e-commerce juggernaut reported a record US$38.4bil in sales from its annual 24-hour Singles Day shopping blitz, but growth in the closely watched number slowed to 26%, its slowest since the event began in 2009.
Alibaba had hoped to use the online sales fest to tee up the Hong Kong listing, according to sources. But Alibaba’s shares in New York ended down 0.24% on Monday, slightly underperforming the wider market. — Reuters