HONG KONG (Reuters) – Chinese e-commerce giant Alibaba is set to price its initial share sale in Hong Kong in the next few weeks to raise up to $13.4 billion in the largest deal in the city since 2010, and is the world’s largest-ever cross-border secondary listing.
FILE PHOTO: the logo of Alibaba Group is seen during Alibaba Group’s 11.11 Singles Day a global shopping festival, at the registered office of the company, in Hangzhou, Zhejiang province, China, on November 11, 2019. REUTERS/Aly Song/Files PhotoWHY IS ALIBABA’s LISTING IN HONG KONG?
Analysts say that with the setting up of a base outside of the United States, the AMERICAN stock exchange listed company options, especially in light of the U.S.-china trade dispute.
It is an “escape words”, said He, Lundy, an analyst at the Quiddity of Advisors, which publishes SmartKarma.
“Investors will be able to take delivery of or to buy and sell shares (in Hong Kong), the US-china relations are getting worse. This should be seen as a significant benefit for the U.S.-listed Chinese company,” he added.
Alibaba, which is due to start trading on Nov. 26 in Hong Kong, it would also be able to take advantage of Chinese demand.
As it is, it will not be eligible for trading up to and including June, for the Stock Connect, which links the Shanghai and Shenzhen and Hong Kong, analysts and investors are expecting that the demand is connected to the mainland, from mom-and-pop investors, to raise his ratings.
Alibaba’s Hong Kong-the deal is, technically, are small compared with the $476 billion in market capitalization, and it will dilute the existing shareholder, up by only 2.8%, compute the company’s business. [nL4N27T2DL]
WHY NOT MAKE A LIST IN SHANGHAI OR SHENZHEN?
Alibaba is, in fact, be too large for the domestic market.
China is home to the world’s No. 2 is a pool of funds, the local share of the sales, usually much less than that in Hong Kong.
While Alibaba holds the record for the world’s biggest initial public offering, with the $25 billion New York listing in 2014, on – pipping Hong Kong hosted: Agricultural Bank of China’s $22-billion deal in 2010, China is the world’s largest initial public OFFERING in the last ten years, the $7.3 billion in float, in 2009, the China State Construction Engineering Corp, Refinitiv data show.
Beijing has been working to help a fast-growing start-ups listed in the home, as well as the lure that got away, including that of Alibaba. This year, the STARS of the Market, in order to host innovative, early stage companies are less controlled and more of a Nasdaq-style entry, the first of its kind in China. [nL4N2553XV]
WHY IS IT A BIG DEAL FOR HONG KONG?
Alibaba postponed its listing plans in the summer as well as the political protests that began in June worsened.
The company’s decision to push now, it will be seen as a vote of confidence in Hong Kong’s financial future, even if the protests becoming more violent. [nL4N25H123][nL4N27U6PU]
In the list, it is also the culmination of six-plus years of discussion, consultation and amendments to the rules, and that was all due to Alibaba’s decision in 2013 on the list is New York, not in Hong Kong.
This was driven by the city’s refusal to relieve it of its one-share-one-vote manner of accepting Alibaba’s unusual corporate governance, which is a self-selecting group of company insiders, a majority of the board seats.
Many of the participants will be able to make the trade of Alibaba in addition to arch-rival Tencent, it would have encouraged other tech companies to follow in striking a balance between Hong Kong’s reputation for hosting of the bottom of Chinese state-owned enterprises, and the local tycoon-controlled conglomerates.
Last year, the stock market operator Hong Kong Exchanges & Clearing is being pushed by the rules to which the companies are allowed to make a list of the different classes of shares, opening a path for tech-giants are mentioned elsewhere, such as the Alibaba shares are selling in the city.
Alibaba was the first to do so, while others are expected to consider following the same path.
Reporting by Jennifer Hughes; Editing on the ipad has to Himani