Alibaba Group Holding's application to list new shares in a secondary listing in Hong Kong has just been approved. The Hong Kong Exchanges and Clearing Limited's listing committee reportedly approved the application, essentially giving the Chinese tech giant the green signal to start its week-long roadshow.
According to reports citing sources close to the matter, Alibaba is apparently planning to sell up to HK$117 billion or $15 billion of new shares. With those figures, the company's second initial public offering (IPO) is expected to catapult Hong Kong into the world's top fundraising destination for the seventh time over the last 11 years.
The massive last-minute IPO will push Hong Kong well ahead of the New York Stock Exchange and the NASDAQ in this year's race to become the top global IPO destination. It will also manage to offset the last few months of lackluster IPO performance in the city, which had included botched listings with a combined value of over $11 billion. T
he city previously had banked on IPOs from Budweiser Brewing Company APAC and ESR Cayman to push it to the top, but those listings were unfortunately canceled.
Alibaba will reportedly start its week-long roadshow this week, approaching potential retail and institutional investors and gauging the demand for its new shares. Sources familiar with the matter have stated that Alibaba could announce the pricing of secondary listing as early as on November 20 with official trading in Hong Kong opening just a week after.
Gordon Tsui Luen-on, the chairman of the Hong Kong Securities Association, had stated that Alibaba's IPO will undoubtedly be very popular with Hong Kong investors given its brand and popularity. Most investors are apparently already familiar with the company's business and its track record, making the decision to invest relatively easy.
Since it listed in New York in 2014, Alibaba's stocks have performed fairly well. With a secondary listing in Hong Kong, Chinese investors will now have more opportunities to invest either directly or through the stock connect scheme. Mainland China investors have been waiting very long for the listing. If it does push through, mainland investors should finally be able to participate in the growth of one of the country's most profitable tech firms.
Brokers with knowledge of the negotiations have revealed that both Credit Suisse and China International Capital Corporation are approaching different banks to form a syndicate to underwrite the planned share sale. Among those that had reportedly already been approached include JPMorgan Chase, Citigroup, and Morgan Stanley.
