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Alibaba poised to launch a record $13.4 billion Hong Kong share sale: sources

HONG KONG (Reuters) – Chinese e-commerce giant Alibaba Group is ready for the launch of a Hong Kong share sale expected to raise up to $13.4 billion as soon as Thursday, according to two sources with knowledge of the discussions.

FILE PHOTO: the logo of Alibaba Group is seen at the World Internet Conference (WIC) in Wuzhen, Zhejiang province, China, on Oct. 20, 2019. (REUTERS photo/Aly Song, File/Photo

The deal, which would be the world’s largest, cross-border, the secondary advertisement can be seen as a boost for Hong Kong, which has sunk into its first recession in a decade, with more than five months of street protests and concerns about the US-China trade war took its toll.

As Alibaba executives are preparing for a Thursday launch, another source said that the timing could slip, depending on the developments in the protests.

All three sources declined to be identified because the information is not open to the public.

An Alibaba spokesman declined to comment on the company’s listing plans.

It was all going to be the sale of the shares earlier in the year, but in August, have postponed the deal as anti-government protests rocking the city ever since the days of June, it became more and more violent.

Third, the source said, Alibaba was sure that the company is able to overcome the negative sentiment in Hong Kong’s financial markets, triggered by the protests.

The deal was originally expected to raise up to $15 billion, the source said that the company could sell up to 500 million of primary shares at the price. Included in a typical “greenshoe”, or overallotment option, to sell some additional shares, the sale could raise up to $13.4 billion.

A sale of that size, it will dilute the existing shareholders by 2.8%, and an investor may trade shares between the two stock markets, the source said.

Alibaba will lodge in the US, applications for the approval and publication of a preliminary prospectus for the deal on Wednesday evening to the Hong Kong Stock Exchange’s website.

In Hong Kong the shares of which are expected to be offered with a discount of not more than 5% of the US equivalent.

At $13.4 billion, 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 to the sale of the shares to be aimed at an entirely new stock market, according to data from Dealogic.

Alibaba, the world’s record for an initial public offer in 2014 to $25 billion in New York city driving, but it was short, losing the crown to the kingdom of Saudi Arabia’s Aramco. The oil company is expected to be in the range of $20 billion to $40 billion in an IPO expected to price in the next couple of weeks.

SINGLES: ONE DAY DELAY

Alibaba has not yet said what he plans to do with the new funds. However, the company is looking to expand its Chinese customer base beyond its core market in the large cities of the less developed countries, to combat the slow down in retail sales growth.

On Monday, the e-commerce juggernaut, reported a record $38.4 billion of the sales volume of the annual and 24-hour Singles Day shopping blitz, but with the increase in the closely watched number is delayed by up to 26% for the first time since the event began in 2009.

Alibaba expected to use the online sales festival at the tee of Hong Kong listing, according to sources with knowledge of the deal of the planning. But in Alibaba’s shares in New York, down 0.24% on Monday, slightly underperforming the broader market.

However, this year, the New York-stocks rose 36.4%. Hong Kong’s blue-chip Hang Seng Index to a 2.6% increase for the year.

Alibaba has, however, been working to ensure the deal’s success in many different ways, have chosen to include the stock code, 9988, according to two sources. For the Chinese speakers, which combines some of the best numbers together in the symbol of lasting prosperity, especially when spoken in Cantonese, the language spoken by the majority in Hong Kong.

The number of plays in the operation of the existing U.S. stock code “BABA”, it sounds like you’re saying “88” in Mandarin chinese.

China’s CICC, Credit Suisse are leading the deal. Last week, Alibaba added in Citigroup JPMorgan chase and Morgan Stanley to that list, and more banks are expected to participate in the consortium.

Report by Scott Murdoch; Writing by Alex Hughes; Editing by Carmel Crimmins, Christopher Cushing, and Louise Heavens & Kim Coghill

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