Boon for Hong Kong as Alibaba plans $15bn listing in late November

Company is due to seek approval from Hong Kong's listing committee next week

Alibaba is moving ahead with plans to raise as much as $15 billion in a Hong Kong share sale. Reuters. 

Chinese retail titan Alibaba plans to list in Hong Kong in the final week of November, two people with direct knowledge said, aiming to raise up to $15 billion (Dh55bn) in a deal that signals a vote of confidence in the Asian financial hub.

The public offering by the e-commerce specialist, whose primary listing is in the United States, would take place at a pivotal moment for Hong Kong's future as the city has been wracked by months of anti-government protests.

It also comes at a time when there has been a thaw in relations between China and the United States, which have been locked in a trade war that has buffeted financial markets.

Alibaba's bookbuilding and listing is due to take place in the week beginning November 25, said the sources, who declined to be identified due to the sensitivity of the matter.

The company is first due to seek approval from Hong Kong's listing committee next week, on Thursday, two separate sources with direct knowledge of the matter said.

An Alibaba spokesman declined to comment on the timing of the share offering.

The transaction would be the world's biggest-ever cross-border secondary listing, according to Dealogic data. Alibaba currently holds the crown for the world's biggest initial public offering for its $25bn 2014 float in New York.

Alibaba has not said what it plans to do with the proceeds of the secondary listing, in which it aims to raise between $10bn and $15bn.

However the company is looking to expand its Chinese customer base beyond its core market in big cities to less developed areas to combat slowing retail sales growth.

It also faces rising competition from nimbler rivals such as Pinduoduo which have outsmarted the retail juggernaut in smaller cities with deep discounts and group-buying deals.

The Hong Kong listing presages a year-end rush for global equity markets, with the Saudi government planning to sell two per cent of oil giant Aramco in a deal that could topple Alibaba's own IPO record.

If successful, the Alibaba deal could provide a shot in the arm for moribund capital markets, where investors have proved increasingly skeptical of the valuations sought by much-hyped tech start-ups such as ride-hailing giant Uber, which has fallen by about a third since its float in May.

More recently, office-space sharing startup WeWork was forced to drop its IPO plans and seek a cash injection from investor SoftBank Group as its valuation collapsed to $8bn from $47bn.

Companies have sold shares worth $429bn via IPOs and follow-on sales so far this year – far short of the $604bn in the whole of 2018, according to data from Refinitiv.

Alibaba had initially been working on an August listing in Hong Kong but put the deal on hold as anti-government protests left the city mired in financial and political uncertainty.

The return of this deal would cap a resurgent market in Hong Kong, where a series of big floats since September have helped the bourse operator, Hong Kong Exchanges & Clearing (HKEX), become serious competition once more to the American players.

So far companies in Hong Kong have sold shares worth $22.3bn via IPOs this year, compared with $24.5bn on Nasdaq and $22.6bn via the NYSE, according to Refinitiv data.

Alibaba's decision in 2013 to drop plans for a primary listing in Hong Kong, and turn instead to New York, triggered passionate debate among bankers and officials, and resulted in rule changes that paved the way for this deal.

Now bankers and investors are watching closely to see whether other US-listed Chinese companies such as Baidu and JD.com might follow Alibaba's lead.

The listing could yet be delayed, however, if the protests worsen once more. The demonstrations are in their fifth month and are frequently violent. The death of a student on Friday who fell from a parking lot is expected to spark fresh protests and fuel anger at police.

Alibaba will next week appoint more banks to help sell its shares in Hong Kong, the sources said.

The deal is currently being led by China International Capital Corp (CICC) and Credit Suisse. Major investment banks led by Morgan Stanley and Goldman Sachs are currently jockeying for the most senior positions behind those two. The new timing means the company will have an opportunity to show prospective investors its most recent sales figures after Singles Day, mainland China's largest annual online shopping day.

Alibaba's sales last year reached $30bn on the day, which was more than three times as large as Cyber Monday, the equivalent shopping day in the US.

Alibaba last week reported second-quarter revenue increased by 40 per cent, to $16.91bn, beating analysts' expectations.