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Alibaba wins approval from Hong Kong Stock Exchange for secondary listing

posted onNovember 13, 2019

The Hong Kong Stock Exchange (HKEX) gave a green light to Alibaba shares secondary listing as the Chinese e-commerce giant aims to raise as much as $15 billion more from the public, the South China Morning Post reported on Wednesday (Nov. 13). The stocks of Asia's most valuable company, which is already listed on the New York Stock Exchange, are expected to begin trading after November 25.

According to the sources, the price for each stock should be announced as soon as November 20. Several Chinese banks and Citi, JPMorgan, Morgan Stanley are said to join the share sale.

Alibaba originally filed for a Hong Kong listing in June but the transaction was put on hold amid growing political unrest in the Asian financial hub where weeks of frequently violent demonstrations have plunged the city into turmoil. 

By listing in Hong Kong, Alibaba could defend itself against a possible delisting in the US, analysts told the Nikkei Asian Review. Officials in the Trump administration and US legislators have reportedly considered delisting Chinese companies as part of the ongoing US -China trade war which continues to fuel uncertainty and roil business. 

Analysts also say Alibaba's prime motivation is to make its shares more accessible to Chinese investors, who otherwise cannot invest in U.S.-listed stocks. Chinese investors would expect to be able to buy Alibaba shares through the "Stock Connect",  a cross-boundary investment channel that connects the Hong Kong, Shanghai and Shenzhen Stock Exchanges.

First launched In November 2014, the scheme now covers over 2,000 eligible equities. The “Stock Connect” initially excluded Hong Kong-listed  dual-class shares which  give greater voting rights to company founders over individual investors but the Chinese authorities relaxed this bar last month.

Alibaba in its most recent quarterly earnings reported a 40 per cent surge in revenue year-on-year and net profit more than tripled to Rmb72.5bn ($10.4bn). 

Alibaba share price

On Monday (Nov.11), the astounding revenue-generating enterprise with a market value of $486 bn (based on the price of its New York Stock Exchange-traded shares), had a big success with its Singles Day shopping event that ended with a new record sales of $38.4 billion (268.4 billion yuan) achieved for 24 hours only.

By comparison, according to SalesCycle, in 2018 Black Friday sales in the U.S. only totalled $6.2 billion and Cyber Monday 2018 sales totaled another $7.9 billion,

Singles Day, also dubbed “Double Eleven,” is an informal, anti-Valentine's Day holiday in China. Its date, Nov. 11, was chosen because the date is written as four ones, or singles.

Alibaba started offering Singles Day discounts in 2009  with participation from just 27 merchants. Since then the event has grown into the  world’s largest 24-hour online shopping spree. More than 200,000 brands participated in this year's event. 

This was the first time Alibaba’s Singles’ Day was held since its billionaire co-founder Jack Ma stepped down as chairman in September to focus on philanthropy and education. 

Daniel Zhang (inventor of Singles Day) became CEO. Ma remains as a member of the Alibaba Partnership, a 36-member group with the right to nominate a majority of the company's board of directors. 

Alibaba holds the record for the world's largest initial public offering with its $25 billion float in New York in 2014. The new deal, Dealogic data showed will be the world's biggest-ever cross-border secondary listing. Last year, $32bn was raised in the Hong Kong bourse.

UPDATE 15/11/2019

Alibaba finally launched its IPO on the Hong Kong Stock Exchange (HKEX) at 9am on Friday (Nov 15). The public offering will close at noon on Wednesday (Nov 20). 

The IPO, listed under the stock code 9988, comprises 12.5 million shares for individual investors and 487.5 million shares for subscription internationally.

Shares are sold in lots of 100, meaning any prospective buyer must pay at least HK$18,989.45 (US$2,425), Alibaba said in its IPO prospectus. 

The list of successful applicants will be published on Nov 25, and the shares will begin trading on HKEX on Nov 26. 

UPDATE 26/11/2019

Alibaba's stock surged more than 6% in its Hong Kong debut in one of the year's most anticipated stock offerings. Shares of the Chinese e-commerce giant hit an early intraday high of 189.50 Hong Kong dollars per share and closed up at 187.60 Hong Kong dollars ($23.97) on their first day of trading. 

The Hangzhou-based company is trading under the stock code 9988, as nine and eight are considered to be lucky numbers in the Chinese culture, indicating long-lasting prosperity. 

"We have come home," Alibaba said Tuesday morning on Weibo, the Chinese equivalent of Twitter. 

Alibaba’s Hong Kong listing became the world’s largest offering so far in 2019.

UPDATE 03/12/2019

Alibaba raised additional additional 13.17 billion Hong Kong dollars ($1.68 billion)
in greenshoe option. Greenshoe options typically allow underwriters to sell up to 15% more shares than the original issue amount if the demand for a security issue proves higher than expected.