The Chinese retail group Alibaba has kicked off this year’s biggest share sale, with a plan to raise up to HK$100bn (£10bn) through a listing in Hong Kong.
The sale will be viewed as a boost to Hong Kong after five months of violent anti-government protests and just weeks after it was confirmed that the territory had plunged into recession. Hong Kong’s economic activity was down more than 3% in the three months to September as a result of a downturn in exports and a collapse in consumer and tourist spending.
Alibaba, China’s biggest publicly listed company, is selling 500m shares, but will offer investors an extra 75m shares if there is substantial demand. It means Alibaba will raise between HK£88bn and HK$101bn, before underwriting fees and other expenses. The company has priced its shares at a small discount to its New York-listed shares to pull in investors.
The initial batch of shares will start trading on the Hong Kong stock exchange next week, under the share code 9988 – numbers that are considered auspicious in Chinese culture and represent eternal prosperity.
The e-commerce firm originally hoped to raise up to $20bn when it filed for the listing in June but its plans were put on hold as clashes between police and pro-democracy protesters escalated.
However, Alibaba’s Hong Kong listing is still set to be the largest share offering across global markets in 2019, with banks including Credit Suisse, Citigroup, and JP Morgan likely to pocket large fees for working on the deal.
Jasper Lawler, the head of research at London Capital Group, said the decision to list in Hong Kong was strategic. “The company has huge cash stockpiles so doesn’t need to raise the funds in Hong Kong.
“The advantage for Alibaba is twofold: it can diversify its shareholder base during the US-China trade war and it can command a high price, in part because investors in Hong Kong are clamouring for something positive amid the protests.”
Alibaba has said it has confidence in Hong Kong’s future. The chairman and chief executive, Daniel Zhang, said last week: “We continue to believe the future of Hong Kong remains bright. We hope we can contribute in our small way, and participate in the future of Hong Kong.”
It is the e-commerce company’s second big stock market listing. Alibaba still holds the record for the largest initial public offering after raising $25bn through its New York stock market debut in 2014. It sold shares then at $68 and they now change hands at $185, valuing the company at $483bn.
The company, which was founded in 1999, spans online payments, cloud computing, music streaming, instant messaging and the South China Morning Post news organisation.
It plans to use the cash from the Hong Kong listing to “ continue to innovate and invest for the long term”.
Alibaba’s founder, Jack Ma, who stepped down as chairman in September, is China’s richest man, with a fortune estimated at $38.4bn (£30bn), according to Forbes.
