- Stockbrokers set aside at least HK$120 billion for customers who want to borrow money to subscribe for Alibaba’s retail share offering
- Application for Alibaba’s retail shares will be a fully electronic process, a first for Hong Kong
Cherry Lai plans to spend a six-digit figure on Alibaba Group Holding shares when its retail share offering in Hong Kong opens for subscription on Friday.
"My experience and spending record at Taobao proves the e-commerce giant has a very bright future," she says. Known as the "Taobao Queen" among friends and family, Lai has over the past decade spent more than HK$4 million (US$510,903) on everything from toothbrushes to toys for her four dogs on the e-commerce platform operated by Hangzhou-based Alibaba.
The company, which owns the South China Morning Post, has been listed in New York since 2014, hopes a secondary listing of up to US$13.86 billion worth of shares in Hong Kong will help it tap a loyal fan base " one that is crucially more familiar with its business " closer to home.
Lai, among the hundreds of millions of Taobao and Tmall.com users who helped Alibaba post a record 268.4 billion yuan (US$38.4 billion) in a 24-hour spending spree known as Singles' Day on November 11, is the kind of customer the e-commerce giant wants to turn into a shareholder.
"I don't have any US stock trading account, so I never thought of buying Alibaba shares in the US," says Lai, who blogs as Taobao Queen on Facebook. "I'm so glad that it's listing in Hong Kong. Now, I can buy its shares."
"I spend about HK$30,000 to HK$40,000 on Taobao every month. As I spend so much (on the platform), it is a good idea for me to become a shareholder of the company and (take part) in its business growth," she adds.
Lai says she has invested in the past, mainly in second and third liners as she likes to speculate. She has lost some money and made some in the process. Since Alibaba is a solid company, she plans to take a long-term view. "I plan to hold on the shares for the long term. Besides its e-commerce platform, it also has other companies, which form a good ecosystem. More importantly, this is a company whose business I know very well."
Some of Hong Kong's 600 stockbrokers have set aside at least HK$120 billion for customers who would want to borrow to finance their purchase of Alibaba shares.
The company has said its listing price will not be higher than HK$188 per share, thus investors will only have to pay a minimum HK$18,800 for a lot of 100 shares to subscribe. The shares will start trading on November 26. Alibaba's total offering of 500 million shares, plus an upsize option of 75 million shares, will raise as much up as HK$108.1 billion based on HK$188 per share. That makes it the largest listing worldwide this year, and the biggest in Hong Kong since the insurer AIA's HK$159.08 billion deal in 2010.
What does Alibaba's secondary listing mean for investors?
Lai and other potential subscribers will not have to contend with the long queues that preceded some of the city's most sought-after IPOs, such as the HK$124.95 billion offer by Industrial and Commercial Bank of China in 2006. This time, there will be no printed prospectus or application forms.
The entire subscription process will be fully conducted electronically, consistent with the way the company and its customers conduct their transactions, according to Alibaba's statement Friday. Investors will be able to read its prospectus, subscribe and pay for retail shares online.
"It is a good idea for Alibaba to have an electronic share offering, as the traffic in Hong Kong has been chaotic these past few days, and many banks have had to close early (because of the city's anti-government protests)," says Tom Chan Pak-lam, chairman of the Institute of Securities Dealers, an association of stockbrokers. "A majority of investors are already used to electronic share offerings."
Banks, investors hoard cash for Alibaba's 'giant' listing, push up Hibor
The protests, in their sixth month now, have not dented the city's appetite for the listing, Chan says. "Investors like to buy into a brand they are familiar with, and that is the advantage of Alibaba's listing in Hong Kong. Many brokerages have been approached by a lot of retail customers who are planning to buy the stock."
Stephanie, another retail investor eyeing Alibaba stock, says many in her 13-member family plan to buy the shares. "My whole family is looking forward to Alibaba listing in Hong Kong," she says, declining to provide her surname. "I haven't bought any technology stocks, as I am very conservative. But I have shopped at Taobao and has used Alipay. This gives me confidence in the listing," she adds.
Not everyone is rushing in, though. Polly Leung, who shops every year during the company's Singles' Day shopping gala, says she thinks the listing price may be too high.
"I would like to buy into the Hong Kong listing if there is a discount of about 10 per cent to (Alibaba's) US listing. But at HK$188, it is at a premium to its US stock closing in recent days. I think it is a bit expensive," she says.
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