Alibaba Group has officially announced the pricing of its shares that will be listing in Hong Kong this year. The price is slightly lower than the company's US-listed depository shares in New York. Despite the slight discount, Asia's most valuable company will still hold the record this year as having the world's largest initial public offering (IPO); at least until Saudi Aramco officially launches its domestic listing in the coming weeks.
The Chinese internet tech giant announced in a statement this week that it will be pricing its secondary stock offering in Hong Kong at HK$176 per share. The pricing was determined through an extensive global marketing process that gauged investor interest in the secondary listing.
The pricing for the company's listing in Hong Kong is around 2.6 percent lower than its closing price in New York as of Tuesday, November 19. The company's shares in the US bourse closed at HK$185.25. The price is also 6.4 percent lower the indicative ceiling price of HK$188 for retail investors in Hong Kong.
According to the Hangzhou-based firm, there was a lot of demand for its shares amongst retail investors. So much so, that the company experienced an oversubscription around 40 times that of its IPO in New York.
Subscriptions to the company's shares reached a record HK$94 billion for the city. The company was even forced to close its order books early for institutional investors due to the massive demand. The booking came mostly from global institutions, China funds, long-only investors, and sovereign wealth funds.
The Hong Kong Exchanges and Clearing Limited (HKEX) also announced this week that it its be making the company's options and futures contracts available on November 26, with the company shares also being made available for short-selling.
Based on its announced pricing, Alibaba should be able to raise as much as $13 billion if all of its 575 million shares are sold. This would make the IPO the biggest one yet for 2019. Alibaba will initially offer up to 500 million shares during its listing, with an option to add 75 million more if needed. Out of the 500 million shares, 12.5 million will be offered to retail investors in Hong Kong. Alibaba does have the option to increase that allocation by as much as 50 million if there is a high demand.
The secondary listing will be the company's official homecoming following its first IPO in New York back in 2014. During its first IPO, Alibaba managed to raise more than $25 billion, earning it the title of the largest IPO debut in history. Alibaba's listing in Hong Kong will finally give Chinese and Asian investors the chance to take advantage of the e-commerce giant's growth.
