Alibaba reportedly delays $21b HK listing

Preparations for Alibaba's listing, potentially the world's biggest equity deal this year and the largest follow-on share sale in seven years, have been under way for some time.
Preparations for Alibaba's listing, potentially the world's biggest equity deal this year and the largest follow-on share sale in seven years, have been under way for some time.PHOTO: REUTERS

HONG KONG/NEW YORK • China's biggest e-commerce company Alibaba Group Holding has delayed its up to US$15 billion (S$20.7 billion) listing in Hong Kong amid growing political unrest in the Asian financial hub, according to two people with knowledge of the matter.

Alibaba's Hong Kong-listing plans are being watched closely by the financial community for indications on the business environment in the Chinese-controlled territory and provides a window into Beijing's reading of the situation.

While no new timetable has been formally set, Alibaba could potentially launch the deal as early as October, still seeking to raise US$10 billion to US$15 billion, depending on whether political tensions have eased and market conditions have become more favourable, one of the people said.

The decision to postpone the deal, initially set to launch late this month, was taken at a board meeting before Alibaba's earnings release last week, the second person said.

The delay was due to the lack of financial and political stability in Hong Kong, the people added, following more than 11 weeks of frequently violent pro-democracy demonstrations which have plunged the city into turmoil.

Police have fired more than 1,000 rounds of tear gas, while more than 700 people have been arrested, followed by an unprecedented airport shutdown last week.

Hong Kong's benchmark Hang Seng Index fell to seven-month lows last week.

 
 
 

"It would be very unwise to launch the deal now or any time soon," the first person said. "It would certainly annoy Beijing by offering Hong Kong such a big gift, given what's going on in the city," the source added.

Preparations for Alibaba's listing, potentially the world's biggest equity deal this year and the largest follow-on share sale in seven years, have been under way for some time.

Earlier this year, Altaba, the Yahoo offshoot holding the company's stake in Alibaba, announced plans to sell up to its entire 11 per cent stake - an event Alibaba would want to see completed ahead of its Hong Kong float to stabilise its US trading volumes before investors need to adjust to the two prices that would be available following a Hong Kong listing.

The Altaba sale has been completed, the second person said.

Both people declined to be identified as they were not authorised to speak to the media. Altaba did not immediately respond to a request for comment outside regular business hours. Alibaba declined to comment on its Hong Kong deal plans.

The second source, however, said Alibaba views the Hong Kong deal as a way to "diversify its access to capital markets", but not as core to its business. Alibaba "does not see the postponement as a blow", the person added.

Meanwhile, a listing by Alibaba is a big deal for the Hong Kong stock exchange, which is lagging behind its New York rivals in the annual battle to be the leading global listings venue.

Just last month, Anheuser-Busch InBev cancelled a planned initial public offering of its Asia-Pacific unit in Hong Kong that was worth up to US$9.8 billion.

"It won't be too bad for investors as long as Alibaba is going to Hong Kong, sooner or later," said Bocom International technology analyst Connie Gu. The delay could in fact temporarily benefit rival Chinese technology stocks such as Tencent Holdings and Meituan Dianping if it meant investors would hold off withdrawing their capital from those companies in preparation for investing in Alibaba's Hong Kong listing, she added.

The city loosened its rules last year specifically to lure overseas-listed Chinese technology giants to list closer to home. Alibaba would be the first to test the new system.

Asked last week whether the Hong Kong turmoil would affect Alibaba's listing, Hong Kong stock exchange chief executive officer Charles Li avoided directly acknowledging the company's application, which is still technically confidential.

But Mr Li said: "I am confident that companies like that ultimately will find a home here because this is home, and I think they will come. I don't know when though."

 
A version of this article appeared in the print edition of The Straits Times on August 22, 2019, with the headline 'Alibaba reportedly delays $21b HK listing'. Print Edition | Subscribe