Alibaba’s Hong Kong IPO set to trade at $22.48 per share – sources

Alibaba’s Hong Kong IPO set to trade at $22.48 per share – sources
Written by:
Damian Wood
20th November 2019
Updated: 11th March 2020
  • Alibaba will today finalize the pricing of its secondary IPO
  • The new round of funding will take place in Hong Kong in the midst of the ongoing protests
  • Alibaba hopes to raise up to $13.4 billion
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Ecommerce giant Alibaba will be going for its second round of funding with an aim of acquiring an additional $11 billion. The Chinese eCommerce currently holds the record of having issued the largest IPO globally, an exercise that netted $25 billion to boost the company’s capital base.

Alibaba plans to list its secondary IPO in Hong Kong, pricing its shares at $22.48, which is 2.8% less than the Group’s first IPO price, sources familiar with the matter said.

The deal is so far the largest cross-border secondary listing meant to raise 88 billion Hong Kong dollars (circa $11 billion). Chinese investors believe the IPO amount is auspicious since the number 8 suggests prosperity in their culture.

The $11 billion is before a “greenshoe” that will allow for an over-subscription which could the see the IPO raise up to $12.9 billion, this is according to two sources that declined to be named because the information is yet to be made public.

A greenshoe is a clause in an IPO that allows underwriters to buy up to 15% on top of the initial amount indicated in the IPO prospectus. However, the Group has intimated at raising up to $13.4 billion should they find the need to exercise the greenshoe.

A source that spoke to Bloomberg said the company has already closed the window for admitting new institutional investors, saying its planned quota for such investors had already been met.

The final retail price structure of the IPO is to be finalized in Hong Kong today and institutional investors will also be informed about the number of shares they would be allocated. Both Reuters and Bloomberg could not get a comment for Alibaba’s officials.

Alibaba’s Hong Kong listing is coming at a time when the city’s unrest enters the seventh month following a standoff between the citizens, and the police and local government.

But despite that, the company’s investors don’t appear dampened by any of that, with many expecting the IPO to receive an overwhelming number of subscribers. If successful, Alibaba will snatch the top spot from mainland’s tech giant Tencent Holdings Ltd for the title of Hong Kong’s largest listed corporation.

The tech giants’ shares closed Tuesday with a slight jump of 0.35%, settling in at $185.25.

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