Alibaba seeks $15bn in a Hong Kong share sale

Hong Kong — Alibaba Group is planning a listing hearing early next week and is seeking to raise as much as $15bn in a Hong Kong share sale, people familiar with the matter say, moving ahead with the city’s largest first-time stock offering since 2010.

Asia’s largest company by market value is now preparing for a hearing as mandated by companies that list on the Hong Kong bourse, the people said, requesting not to be named discussing a private matter. Alibaba declined to comment in an e-mail.

Alibaba’s listing will be a triumph for a Hong Kong stock exchange that lost many of China’s brightest technology stars to US rivals. The Chinese e-commerce giant had aimed to list as early as mid-2019 before pro-democracy protests rocked the financial hub, while trade tension between Washington and Beijing clouded the market’s outlook.

On Thursday, the US and China agreed to roll back tariffs on each other’s goods in phases as they work towards a deal.

Billionaire Alibaba co-founder Jack Ma is moving closer to his dream of listing closer to home — a move that curries favour with Beijing and hedges against trade war risks. A successful Hong Kong share sale could also help finance a costly war of subsidies with Meituan Dianping in food delivery and travel, and divert investor cash from rivals like Meituan and WeChat-operator Tencent.

It could put the capital to work investing in new technologies such as artificial intelligence or fast-expanding affiliates such as Ant Financial. Courting investors closer to home also serves as a buffer of sorts should US-Chinese tensions worsen. Already, US lawmakers such as Senator Marco Rubio are agitating for measures to curb investment flows to Chinese companies, including the extreme option of tossing US-listed firms off American bourses.

Alibaba — which had roughly $57bn of cash and equivalents as of June — rode a national e-commerce boom that stemmed from an increasingly affluent middle class. But like arch-foe Tencent, it’s struggling to sustain growth as the world’s number two economy slows, and China clashes with the US over everything from trade and technology to investment.

At home, signs of strain are growing. China’s GDP growth is expected to slump below 6%, which would be the economy’s slowest pace of expansion in three decades. Still, Alibaba last week reported a 40% surge in quarterly revenue, underscoring the resilience of consumer spending. The company on Monday will wrap up its most important sales event of the year — Singles’ Day — offering further clues on the health of consumption.

Alibaba’s decision to proceed came as Hong Kong’s stock exchange reported its worst slide in profit in almost three years.

Bloomberg