Five years after raising $25 billion in the New York Stock Exchange during world’s largest first-time share sale ever, Alibaba is now considering its second stock listing, this time in Hong Kong. While the proposal is not final as of now, the Chinese tech giant is working closely with its financial advisors to understand the implications and prospects of the second listing. If Alibaba decides to go with the proposal, which may happen during the second half of the current year, it is expected to raise over $20 billion in terms of a share sale in Hong Kong.
The story, originally broke by Bloomberg and quoted undisclosed sources, claimed that the company is looking forward to confidentially file an application for its listing in Hong Kong in the near future. While the plan is preliminary and may change later on, its purpose is to improve the company’s liquidity and diversify funding channels.
Interestingly, Hong Kong was Alibaba’s first listing priority back in 2014 but its regulators refused company’s proposed governance structure which led it to have a record-breaking listing in New York stock exchange. However, it did not have a good previous 12-month period as Alibaba saw a sharp decline in share value during this period.
The news should also not be surprising for market observers as during the last year when Hong Kong moved to allow the dual-class listing of shares, Jack Ma, the founder of Alibaba, expressed to ‘’seriously consider’’ listing his company there. This seems only more practical in the current hostile economic relationship between the US and China as the former has put latter’s tech companies at disadvantage by adding them on a certain blacklist. Douyu, a Chinese giant in the game-streaming service industry, also postponed its Initial Public Offering (IPO) in the US market because of the same hostile environment.
Alibaba’s share value has slid over 22% in one year
Alibaba Holdings Group has gained nearly 13% in 2019 compared to the S&P 500’s percentage of 12.7 for the same period. However, the company has lost 22% in its value since the last year and its current market cap stands at $400 billion. With Amazon leading the industry and the US restricting Chinese companies, the future for Alibaba seems uncertain in the United States.
As Monday is a public holiday in the United States, it will be interesting to see how the US market responds to this news on Tuesday. Officials at Alibaba have declined to give any comment on the story.