Alibaba to Price Hong Kong Shares at USD22.50, Sources Say
Zhou Ailin
DATE:  Nov 21 2019
/ SOURCE:  yicai
Alibaba to Price Hong Kong Shares at USD22.50, Sources Say Alibaba to Price Hong Kong Shares at USD22.50, Sources Say

(Yicai Global) Nov. 20 -- Preparations for Alibaba Group Holding's secondary listing on the Hong Kong stock exchange on Nov. 26 are in full swing. The e-commerce giant is likely to seek HKD176 (USD22.50) for each new share, according to people close to the matter.

Hangzhou-based Alibaba is expecting to raise up to HKD108.1 billion (USD13.8 billion) in the offering, which would be this year's biggest, surpassing ride-hailing operator Uber Technologies' USD8 billion initial public offering in May. The share sale will also boost Hong Kong's status a major international financial hub.

Alibaba plans to issue 500 million new shares under the auspicious ticker number 9988 for up to HKD188 each. It has already been oversubscribed eight times, far more than other recent significant listings in Hong Kong such as brewer Budweiser APAC's September IPO, which was three times oversubscribed.

Alibaba's Hong Kong listing has a special significance, Liu Hongda, fund manager at Zhehang Fund Management, told Yicai Global. Its businesses have stable cash flows, the firm is not in need of extra financing, and is already listed on the New York Stock Exchange, while an additional floatation boosts management and other costs, he said.

But by being a participant in the cross-bounder investment channels Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, Chinese investors will be able to earn growth dividends from the shares more easily during Asian trading hours, improving fluidity, Liu said.

Welcome Boost

The floatation is expected to bring much needed vigor to the region's economy that has been battered by months of civil unrest, he said. It will also encourage more Chinese firms to list in the special administrative region instead of pursuing IPOs overseas. Alibaba has given US investors an annual return of 22 percent and an overall profit of 175 percent over the past five years, he added.

Chinese companies listed overseas are in general more underrated than American ones in the US market, Liu said. Alibaba's comeback will encourage the return of overseas-traded firms such as JD.Com, Pinduoduo, Baidu, Vipshop, Momo, Weibo, New Oriental Education & Technology and TAL Education Group, as well as other sci-tech stocks. This would change the HKEX's capitalization structure where financial and real estate stocks dominate and increase the market's fluidity and valuation.

Alibaba's offering is being underwritten by investment banks China International Capital and Credit Suisse Groupe. Both companies are tightly linked to Alibaba.

The online retailer bought 11.7 percent of Beijing-based CICC stock, around 203 million shares, on the HKEX in February for CNY1.8 billion (USD255.7 million). And Zurich-based Credit Suisse was one of six underwriters for its NYSE listing in 2014 and has played an important role in Alibaba's fundraising events over the years.

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Keywords:   Alibaba Group Holding,Hong Kong