Alibaba SEC filing may signal SoftBank plans to sell, Citi says

[HONG KONG] Alibaba Group Holding registered 1 billion American depositary shares (ADSs) that hadn't been registered before, suggesting SoftBank Group may intend to sell some of its shares.

Japan's SoftBank backed Alibaba before its initial public offering so a large portion of its holdings in the company is not registered as ADSs, Citigroup analysts including Alicia Yap wrote in a note. SoftBank owns 5.39 billion ordinary shares of Alibaba, equivalent to 673.76 million ADSs, or a 24.8 per cent stake, according to Citi's calculations.

Alibaba's Hong Kong shares dropped as much as 4.6 per cent, leading declines of the Hang Seng Index. SoftBank's stock rose as much as 5.4 per cent in Tokyo.

Masayoshi Son's SoftBank has been under pressure in recent months as the value of many portfolio companies has slid with the technology downturn. SoftBank's shares have tumbled about 50 per cent from their peak last year with the decline in the value of holdings, including Didi Global, One 97 Communications and DoorDash.

SoftBank, which reports earnings Tuesday (Feb 8), has used buybacks in the past to bolster its own stock. Alibaba is by far it's most valuable holding.

A representative for SoftBank wasn't immediately available for comment.

The Alibaba filing with the US Securities and Exchange Commission (SEC) will allow the company's stockholders whose shares have never been registered with the SEC to have the flexibility to sell their shares, Citi said. The registration could also cover the company's need to issue new shares for the employee equity incentive plan.

Alibaba registered about 2 billion ADSs when the company conducted its IPO in the US in 2014. BLOOMBERG