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Alibaba will soon go public on the Hong Kong Stock Exchange (HKEX) and has set its share price at HK$188. The company plans to sell a total of 500 million ordinary shares in the Hong Kong listing
Alibaba Group Holding Ltd., has announced pricing for its soon-to-come share listing in Hong Kong. Estimated to have a target to raise $13.8 billion, the company will be selling 12.5 million shares exclusively to retail investors and has pegged it at HK$188 per share. Roughly $24, the sale will easily take its place as Hong Kong’s most expensive initial sale in history.
The company plans to sell a total of 500 million ordinary shares in the Hong Kong listing, finally placing its focus on the Hong Kong financial market after such a long time. Interestingly, Alibaba still has the option of increasing the number of shares available for retail investors, from the stipulated 12.5 million, to a full 10% of the 500 million – a substantial 50 million.
Alibaba CEO Daniel Zhang in a recent letter to investors praised the Hong Kong financial atmosphere and even lamented the company’s inability to get into the Hong Kong space when it went public. At the time, Alibaba decided to opt for the New York Stock Exchange (NYSE) instead of Hong Kong because the company was interested in the dual-class stock, something Hong Kong disallowed. Now, the Hong Kong Stock Exchange has changed its rules, allowing Alibaba to step in.
“When Alibaba Group went public in 2014, we missed out on Hong Kong with regret. Hong Kong is one of the world’s most important financial centers. Over the last few years, there have been many encouraging reforms in Hong Kong’s capital market [and] we continue to believe that the future of Hong Kong remains bright. We hope we can contribute, in our small way, and participate in the future of Hong Kong.”
The letter also specifies that Alibaba intends to use funds received from the issuance, to expand user growth and engagement, as well as the promotion of “digital transformation.”
It is somewhat expected that Alibaba’s entrance into the Hong Kong market might do a lot to excite the Chinese government who have been unhappy about large companies in the country going to seek funding externally. In addition, it might also be a more than welcome change of pace for Hong Kong which has been plagued with pro-democracy protests for quite a while now. Lastly, it will be a great move for Zhang who only recently resumed as CEO after co-founder Jack Ma left the position.
Alibaba is set to overtake Uber’s May initial public offering (IPO), as the biggest one in 2019 after surpassing $8 billion back in May. If successful, Alibaba will not just have the crown for 2019, but will also be the biggest IPO in history at $25 billion.
It might be important to note that there’s a very strong chance Alibaba may not hold this position for long. Saudi Aramco is already set to go public in just a few days and is currently touted as the world’s largest public issue, expected to raise over $30 billion.