Alibaba to resume Hong Kong listing plans as soon as November: sources

[HONG KONG] Alibaba Group Holding Ltd is eyeing a listing in Hong Kong as early as November to raise up to US$15 billion, after political unrest put the move on ice earlier this year, people familiar with the matter said on Wednesday.

Alibaba's listing would boost Hong Kong's status as a major capital markets hub. After topping global rankings in 2018 for funds raised through IPOs (initial public offerings), the city's bourse fell behind the New York Stock Exchange and Nasdaq this year amid months of anti-government protests that have roiled the Asian financial hub.

The float would be the world's biggest equity deal for the year if the IPO for state-owned oil company Saudi Aramco gets delayed to next year. Aramco's IPO could be worth over US$20 billion.

Alibaba plans to seek listing approval from Hong Kong Exchanges and Clearing Ltd shortly after the Chinese e-commerce giant's online retail frenzy Singles Day on Nov 11, and may list its shares towards the end of November or in early December, the sources said.

The company expects to be in a position to forgo so-called pre-marketing meetings where it meets with institutional investors before a deal launch given its size and that many investors are already familiar with the company, the sources added. It is hoping to raise between US$10 billion and US$15 billion through the listing, Reuters has reported.

The sources cautioned that the plans are still subject to market conditions and requested anonymity as the matter is private.

A spokesman for Alibaba, which is already listed in New York, declined to comment. The company had been preparing to launch the listing in late August, but delayed it due to the lack of financial and political stability in Hong Kong after months of frequently violent anti-government demonstrations.

All the same, IPO activity has picked up since September as typically the last four months of the year are the busiest in Hong Kong for public floats.

Such a large offering from Alibaba, potentially the biggest follow-on share sale in seven years, according to Refinitiv data, could also have implications on liquidity in Hong Kong's financial system and the closely watched Hong Kong Interbank Offered Rate (Hibor). This is particularly the case given that investors in the Hong Kong market often borrow funds in anticipation of large share sales.

A rise in Hibor can in turn lift the Hong Kong dollar , which is pegged to the US dollar at a tight range of 7.75 to 7.85. To defend the peg, the Hong Kong Monetary Authority (HKMA), the city's de-facto central bank, buys local dollars if it gets too weak and sells to curb excessive strength.

Alibaba follows in the footsteps of brewer AB InBev , which in September raised about US$5 billion by listing its Asia-Pacific unit in Hong Kong. It was the bourse's biggest and the world's second-largest IPO so far this year.

Homecoming

Alibaba holds the record for the world's largest IPO with its US$25 billion float in New York in 2014.

At that time, the company had initially hoped to float in Hong Kong, but its governance structure clashed with the city's listing rules. Hong Kong Exchanges & Clearing loosened its rules last year, specifically to woo overseas-listed Chinese tech giants to float closer to home.

Alibaba would be the first to test the new system.

Since going public in New York, Alibaba's shares have more than doubled in value, giving it a market capitalisation of around US$460 billion.

In August, Alibaba reported better-than-expected quarterly revenue and profit, aided by growth in its e-commerce and cloud computing businesses.

A total of US$18.5 billion was raised by companies via IPOs on the Hong Kong bourse from January through to mid-October, compared with US$21.9 billion raised on the NYSE and US$23.3 billion on Nasdaq, Refinitiv data showed.

REUTERS