Due to the high demand for its secondary listing in Hong Kong, Chinese tech giant Alibaba Group was forced to close its order books earlier than initially planned. Reports citing sources with knowledge of the matter revealed that Alibaba plans to close its books to prospective institutional investors at noon EST on Tuesday this week. The closing date is roughly 12 hours earlier than initially planned.
According to the same sources, the company decided to close its books early for its $13.4 billion-listing on Monday. Final pricing will reportedly be set by Wednesday evening.
Alibaba will be basing its final pricing on the closing prices for its shares in New York, essentially using it as a benchmark for how much money institutional investors will be paying for its new stocks in Hong Kong. The company's investment banking advisers also stated that they will be considering the investor demand during the marketing process for the IPO's final pricing.
Alibaba Group will be issuing a total of 500 million new ordinary shares during its secondary listing in Hong Kong. Depending on the demand, the company can choose to use its "greenshoe" option, which will result in an additional 75 million shares to be released by the IPO's underwriting banks.
Out of the 500 million ordinary shares, roughly 12.5 million will be reserved for retail investors. Depending on the outcome of the first few days of the IPO, Alibaba can choose to increase the portion of the shares to be made available to retail investors by up to 50 million shares or roughly percent of the total shares being offered.
The company mentioned that it will be pricing its shares for retail investors up to HK$188 or about $24.01 a piece. The remaining shares that will be sold to institutional investors will likely be priced slightly higher than those sold to retail investors.
Based on its shares' retail pricing of HK$188, the company could raise as much as $13.8 billion if it choosing to use its greenshoe option. The secondary listing is significantly lower than the company's public debut in New York in 2014, where it managed to raise a record $25 billion.
The company listing is part of a year-end equity market rush, which will include the upcoming domestic public listing of Saudi's state-owned oil firm Saudi Aramco. The company's officials had announced the IPO's pricing over the weekend, valuing Saudi Aramco at up to $1.7 trillion. Saudi Aramco's upcoming IPO is also expected to beat Alibaba's record if it manages to hit the top-end of its price range.
