Alibaba Group – the New York-listed Chinese telecom giant – is reportedly considering listing in Hong Kong in the second half of this year to raise up to US$20 billion.
The Hangzhou-based company is working with financial advisers on the planned offering, Bloomberg reported on Tuesday, citing unnamed sources familiar with the situation.
The second listing is aimed at boosting its liquidity and diversifying its funding channel, according to one of the sources.
But the report said Alibaba’s listing plans were preliminary and could change.
Last month, Charles Li Xiaojia, chief executive of Hong Kong Exchanges and Clearing Ltd, said he believed Alibaba would choose to get listed on a stock exchange in an Asian time zone, but he was not sure if it would choose Shanghai or Hong Kong.
“Alibaba will definitely come back. It’s just a matter of time… If it finds that there is a possibility that its shares can be traded in an Asian time zone, it will come back,” Li said. “Of course, such a move will increase its regulatory costs. It will come only if it gets more than it pays.”
Li said the telecom giant could act when mainland investors are allowed to buy Alibaba’s Hong Kong shares through Stock Connect.
Alibaba declined to comment on the news.
Dual-class share structure
In 2007, Alibaba.com, a B2B website of Alibaba Group, had its debut in Hong Kong. Its share price did not perform well, which led to the unit delisting in 2012. Then, in mid-2013, Alibaba Group founder Jack Ma Yun said his flagship company failed to get listed in Hong Kong as companies with dual-class share structure were not allowed to go public on the Hong Kong stock exchange.
Founders of technology firms usually become minority shareholders but remain core leaders in their firms after several rounds of fundraising. These companies need to set up a dual-class share structure when going public. However, Hong Kong did not allow such IPOs until April 2018.
In September 2014, Alibaba listed on the New York stock exchange, raising $25 billion, or $68 per share. The shares fell 0.6% to $155 last Friday. Due to the intensifying US-China trade war, the shares have dropped by 16.5% this month.
Mainland investors will be allowed to trade Hong Kong-listed companies with a dual-class share structure from the middle of this year, according to a joint statement issued by the Shanghai Stock Exchange and Shenzhen Stock Exchange last December.
Hong Kong-listed companies with dual-class share structures now include smartphone maker Xiaomi Corp and mobile phone app Meitu. But both are trading below their offering price.