Alibaba readies $13 billion Hong Kong IPO

2 min read
(Image credit: Alibaba Group)

Chinese e-commerce giant Alibaba is looking to raise around $13 billion through a secondary listing on the Hong Kong stock exchange, people with knowledge of the matter told TechNode on Wednesday.

Why it matters: The company’s long-expected secondary listing could be the world’s largest issuance this year and the largest one for the Hong Kong market since 2010.

  • The potential listing would make Alibaba shares available to Chinese investors who are also users of the e-commerce platform.
  • A dual listing in New York and Hong Kong would allow the shares to be traded on a full-day cycle, reflecting investor sentiment in real time.

Details: The company will offer 500 million newly issued shares through the Hong Kong listing, according to its prospectus filed with the SEC.

  • The offering includes a greenshoe option, allowing underwriters to buy an extra 15% of shares from the issuer at the offer price good for a few days after the initial offering, the source said. If the greenshoe option is exercised, the offering will dilute the interest of existing ordinary shares by 2.8%.
  • At Alibaba’s current share price of around $186 apiece, the initial public offering (IPO) could raise around $13 billion.
  • Alibaba hopes to set the IPO price on Nov. 20, the people said.
  • Alibaba gained approval from the Hong Kong stock exchange’s listing committee on Tuesday and is kicking off a week-long roadshow on Wednesday, according to the South China Morning Post.

Context: Alibaba’s business-to-business entity went public on the main board of the Hong Kong stock exchange in 2007, but delisted in 2012.

  • When preparing for a relisting in 2013, Alibaba choose the New York Stock Exchange over Hong Kong so it could offer a dual-class share structure, although founder Jack Ma has commented publicly on multiple occasions that company remains open to a Hong Kong listing.
  • The Hong Kong stock exchange began allowing companies to list with dual-class shares in April 2018, opening the door for tech firms to have share classes with different voting rights.
  • The company had earlier received shareholders approval to split its ordinary shares on a one-to-eight basis, increasing its capital base to 32 billion shares from 4 billion.

Correction: includes a correction about the interest dilution from greenshoe option, which would be 2.8% of existing ordinary shares, not a total of 2.8 million additional shares.