Alibaba reportedly delayed listing in Hong Kong amidst protests

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The protests in Hong Kong may well cost the city's stock market its biggest peach in years.

Alibaba Group, China's largest market-based e-commerce group, is reported to have decided to postpone its $ 15 billion listing in Hong Kong later this month due to the current political and financial instability. of the Special Administrative Region.

According to Reuters, the decision to postpone Alibaba's second registration was taken at a meeting of the board convened in anticipation of the group's quarterly earnings report last week. "It would be very unwise to launch the agreement now or as soon as possible. It would certainly disturb Beijing by offering such a gift to Hong Kong, given what is happening in the city, "said an anonymous source.

Alibaba has never officially confirmed its intention to register in Hong Kong, which had been announced for the first time in May. Asked about the decision to postpone the alleged listing, an Alibaba spokesman said: Fortune the company does not comment on market rumors.

The not so prodigal son

Alibaba – which currently has a market capitalization of $ 461 billion – does not need money from a second list. The group's latest interim report indicated that second-quarter revenues jumped 42 percent to $ 16.7 billion from the previous year, while net income more than doubled for the same period, reaching 4 percent. , $ 5 billion. However, Alibaba's founder and president, Jack Ma's, is known to adopt the approach that if a company expects to need money before raising it, it is too later.

But for Hong Kong Exchanges and Clearing Ltd. (HKEX), the company that runs the local stock exchange, the proposed $ 15 billion listing would offer a bargain deal and listing fee, as well as A second chance.

HKEX gave up hosting the record IPO of Alibaba in 2014 because the Hangzhou-based technology giant wanted to list what was essentially two-class shares, which would give a small group of Alibaba executives greater control of society. HKEX wanted to defend the principle of "one shareholder, one vote" and opposed Alibaba's plan.

Alibaba had already listed its core business B2B – Alibaba.com – in Hong Kong through an IPO of $ 1.7 billion in 2007, but then privatized the unit in 2012 for a amount of $ 2.45 billion, in preparation for the re-listing of the entire business. After Hong Kong rejected the 2014 list, Alibaba instead presented its proposal in New York.

Alibaba's IPO in New York raised $ 25 billion and remains the largest IPO in history. The e-commerce giant has a market capitalization of $ 231 billion on the first day of its transactions. Credit Suisse and Morgan Stanley, two of the six banks that led the transaction, raised $ 49 million each and the NYSE continues to enjoy the benefits of service fees.

Alibaba is not the only Chinese technology company to choose the United States rather than Hong Kong. In 2018, Chinese IPOs in the US were higher than those of US companies, according to Renaissance Capital. There were 23 Chinese registrations in the first three quarters of 2018, while Nasdaq predicts that he will see 40 Chinese IPOs this year. A number of leading companies, such as the Pinduoduo online trading startup and hot-pot vehicle manufacturer Nio, have issued two-class shares.

Hong Kong Bypass

"The question that Hong Kong must address is whether it is ready to look forward," said Alibaba's executive vice president, Joe Tsai, after the HKEX rejected the inscription of the Alibaba 's two – class company in 2013 and had prompted it to settle in New York. Last year, HKEX appeared to respond to Tsai's question by reorganizing its rules to allow two-class actions in Hong Kong.

The change was not smooth. After HKEX announced its new rules in April 2018, the Shanghai and Shenzhen stock exchanges announced that two class class companies would be excluded from their Hong Kong connection programs, saying that investors in the mainland did not understand not how the two-class share plans work. However, confusion has clearly dissipated as the ban was lifted last month.

The Hong Kong Stock Exchange has since fallen to impressive starts in the market. Smartphone producer Xiaomi Corp. was the first company to take advantage of Hong Kong's new rules and raised $ 4.72 billion through a $ 54 billion IPO. This development has also enabled the Hong Kong Stock Exchange to become the world leader in IPOs with 135 companies raising $ 36.5 billion.

according to ReutersAlibaba may postpone its second registration until October. Beijing has set a deadline for protest resolution in Hong Kong, with China celebrating its 70th anniversary on Oct. 1. A $ 15 billion list published by Alibaba would give HKEX something to celebrate.

The not so prodigal son

Hong Kong Bypass

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