Alibaba launches $13.4 billion Hong Kong listing to fund expansion
HONG KONG – Chinese e-commerce giant Alibaba Group launched the share sale for its Hong Kong listing on Wednesday, braving unrest in the global financial hub to try to raise up to $13.4 billion to fund its expansion plans.
The stock is due to start trading on Nov. 26 in Hong Kong, according to a term-sheet seen by Reuters.
The books for institutional investors looking to buy the shares opened during the New York trading session on Wednesday.
A 661-page draft prospectus for what looks set to be the world’s biggest cross-border secondary listing shows Alibaba plans to use the money to invest in online delivery and local services platform Ele.me, as well as online travel group Fliggy.
It will also spend more on developing Youku, which Alibaba says is one of the leading online video platforms in China.
The plans come against the backdrop of slowing e-commerce industry in China, with Alibaba’s annual Singles’ Day shopping blitz recording its weakest sales growth since its 2009 debut.
The share sale, set to be Hong Kong’s largest in more than nine years, is a boost for the city.
Hong Kong has sunk into its first recession in a decade as more than five months of street protests in which more than 2,300 people have been arrested as of last month, and worries about the U.S.-China trade war took their toll.
The progress of the protests is being monitored by Alibaba and its advisers, and is seen as a risk to the deal going ahead, according to people with direct knowledge of the matter.
The institutional book-building for the listing will run for a week and the stock is expected to be priced on or around Nov. 20, two people with direct knowledge of the process said.
A maximum price for the retail component of the deal will be announced next week, one said.
The people could not be named because the information has not yet been made public.
The company also intends to increase its investment in cloud computing and machine learning, the prospectus shows.
The Hangzhou-based company said Alibaba Cloud was currently the world’s third largest Infrastructure as a Service business, by U.S. revenue in 2018, according to a study by Gartner.
The prospectus shows Alibaba has 960 million ‘digital economy users’ in China, including customers of its Ant Financial partnership.
The company said its revenue was 410.8 billion yuan ($58.7 billion) for the year to June 30, 2019, and the total assets on its balance sheet were worth 1.01 trillion yuan. – Reuters