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

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Updated on Mar 11, 2020
Reading time 3 minutes
  • 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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