Alibaba mulls second listing in HK to diversify funding as trade war escalates

BY SILVI WRITER and CHINA DAILY

China’s e-commerce giant Alibaba Group Holding Ltd is considering raising $20 billion via a second listing in Hong Kong to diversify its funding channels and boost liquidity, according to a Bloomberg report citing sources.

The company is working with financial advisers on the planned offering, and is aiming to file a listing application in Hong Kong confidentially as early as the second half of 2019, the source said.

The plans are preliminary and could change, the source added. Alibaba declined to comment, said Bloomberg.

Alibaba declined to comment on this Bloomberg story, calling it a “market speculation which does not deserve a reply”, but it did not deny it either.

The timing of this second offering is quite noticeable.

It comes when the group’s share price (NYSE: BABA) dipped to just US$155 per share on Friday last week from US$195.21 on May 3, as China’s tech companies, not just Huawei, are becoming victims of the breakdown of trade talks between Beijing and Washington. Alibaba’s second listing, consequently, would be seen as the group’s effort to diversify its funding channel and bolster liquidity.

More questions remain about this second offer though:

– Will Alibaba seek to be listed directly in Hong Kong Stock Exchange, or in Shanghai through the Shanghai-Hong Kong Stock Connect? Direct listing seems more likely as the HKSE has, in recent months, seen rising number of IPOs from the mainland’s tech firms, like Xiaomi for example.

– Will the second offering be a successful one? Alibaba raised $25 billion on the New York Stock Exchange in 2014, only after it considered and gave up being listed in the HKSE at that time.

Previously, Alibaba intended to list on Hong Kong Exchanges and Clearing Ltd (HKEX) in 2013, but finally abandoned the plan and pursued an IPO in New York, because the company’s dual-class corporate structure was inconsistent with HKEX’s rules then.

On April 24 last year, HKEX approved the biggest change to its initial public offering rules in two decades, by allowing technology firms that have shares with different voting rights to go public in Hong Kong.

Chinese tech firms Xiaomi and Meituan-Dianping listed on HKEX in July and September last year under the new rule, and Charles Li Xiaojia, CEO of HKEX, said many more companies are interested in filing applications, according to a report from finance.sina.com.

In addition to changing the rules on exchanges, Chinese regulators also made it clear that overseas-listed tech giants are welcomed in coming back to list on the A-share market, with the issue of Chinese Depositary Receipt (CDR) a “shortcut”.

With more preferential policies, some of the big tech companies have shown signs of returning to the A-share market. Ding Lei, founder and CEO of NetEase, said the company will certainly consider A-share listing during an interview at the two sessions last year.

Robin Li, chairman and CEO of Baidu, said the company definitely hopes to come back to the domestic stock market as soon as possible. And Tencent chairman Pony Ma responded that the company will consider coming back when conditions permit.

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