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Alibaba (BABA) has pushed back its list of planned secondary stock in Hong Kong.
Alibaba delays the listing of Hong Kong amid unrest
the New York Post reported that Alibaba had delayed its list in Hong Kong last week. A new Reuters report said the same thing.
Alibaba was targeting late August or September for listing, according to reports. Reuters said the company was considering October. The delay comes amid political unrest in the Chinese-controlled city.
Hong Kong has been the scene of a series of pro-democracy protests in recent months. Thousands of people participated in the demonstrations. Last week, the airport was closed due to protests. Alibaba hopes to launch its quotation offer in Hong Kong after the end of the protests.
In June, Reuters announced that Alibaba had filed a confidential file regarding its secondary listing in Hong Kong. According to the report, Alibaba's goal was to raise up to $ 20 billion through this listing. However, Alibaba's insiders have estimated the fundraising goal of the company at between $ 10 billion and $ 15 billion, as SimpleFX pointed out.
Trading in Hong Kong will help Alibaba increase its cash reserves
That Alibaba eventually raise $ 10 billion or $ 20 billion through its secondary listing in Hong Kong, we believe this listing will help the company to replenish its cash reserves. Alibaba closed the first quarter of fiscal year 2020 with cash reserves of $ 30.9 billion. Amazon (AMZN) ended the second quarter with a $ 23 billion cash reserve. Google Alphabet (GOOGL) and Microsoft (MSFT) ended the June quarter with cash reserves of $ 121 billion and $ 133.8 billion, respectively.
Alibaba needs a powerful war chest to continue investing in order to diversify and expand its business. As a result, we believe that the Hong Kong list and the fundraising opportunity are important.
Alibaba continues to develop its core business activities. However, the company wants to diversify into new activities such as cloud computing, digital media and hardware. We believe these projects will require significant investments in product development, content, marketing and other areas to succeed. In the cloud, Alibaba is investing to expand its capacity with more data centers. The development of data centers can be expensive. Bloomberg announced that Google would spend more than $ 1.0 billion on a new data center project in the Netherlands. Facebook is also planning to spend more than $ 1.0 billion to develop its first Asian data center in Singapore.
Program of repurchase of stocks of financing
In addition to investments, Alibaba also wants to return $ 6.0 billion to shareholders through share buybacks over a two-year period. Alibaba could use its listing funds in Hong Kong to meet expense commitments such as the share buyback program.
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