Alibaba looking to raise US$20 billion in second listing in Hong Kong

Years after its first stock market debut in New York in 2014, Chinese tech giant Alibaba Group is said to be eyeing a second listing in Hong Kong, a move which would help it raise US$20 billion and reduce its stock volatility risks in the United States (US) market.

The new listing would bring the firm closer to investors in its home country and Alibaba is currently working with financial advisors on the planned offering, people who were familiar with the matter told Bloomberg.

Alibaba has plans to file for the listing with Hong Kong confidentially as early as the second half of 2019, the sources said, although they added that the plans are still in their early stages and they could change.

Alibaba’s shares closed lower on Friday down US$1.00 or 0.64% at US$155.00. The New York Stock Exchange (NYSE) was closed on Monday due to a Federal Holiday.

Hong Kong’s dual-class structure reattracts Asian tech giants

In 2014, the e-commerce giant raised US$25 billion on the NYSE, choosing the US over Hong Kong at that time as the latter did not offer dual-class offerings.

Last year, Hong Kong finally acceded to the dual-class share structure, in a struggle to prevent Asian tech unicorns from listing in the US due to its dual-class offerings. The move was met with great reception from Asian tech firms, with Chinese food delivery giant Meituan Dianping and electronics maker Xiaomi Corp choosing to debut in Hong Kong subsequently.

A dual-class share structure gives a favourable share control to founders and executives, which is something tech entrepreneurs who want to continue to hold a controlling stake in their business after it lists in the public market look for.

Listing in a local demographic would also be more palatable for Asian investors. The trade dispute between the US and China and the increased hostility from the US government on Chinese tech firms has created market jitters among investors when they consider trading Chinese firms listed on Wall Street.

US-China trade uncertainty a bug-bear to Alibaba’s share price

Year-to-date, Alibaba’s shares have risen by 13.4%, as it traded at US$136.70 on January 2, 2019. The stock had peaked at US$208.00 in June last year, before the trade uncertainty between US and China in October dragged the tech stock to plunge to US$132.00 on December 21, 2018, the lowest in 18 months.

The weak performance on Alibaba’s shares have been going against the robust earnings it has been posting. For the fiscal fourth quarter, the firm posted a strong top-line which had beat estimates.

Alibaba said it expects revenue for the full fiscal year ending in March 2020 to top 500 billion yuan, which will be a 33% year-on-year increase.

Alibaba debuted on the NYSE on September 18, 2014, at US$68 per share. The listing was the biggest US IPO in history, larger than US tech firms Google, Facebook, and Twitter combined.