Alibaba Group Holding will offer the investors of its Hong Kong shares a slight discount to its US-listed depositary shares, as Asia's most valuable company prepares to kick off the world's largest initial public offering this year.
The Hangzhou-based company may price its secondary stock offering in Hong Kong at HK$176 each based on guidance at the end of a global marketing process, according to people familiar with the matter. The price works out to about 2.6 per cent discount to Alibaba's November 19 closing price of US$185.25 in New York. It is also about 6.4 per cent below the indicative ceiling of HK$188 each for retail investors in Hong Kong. Eight Hong Kong-listed shares are worth the equivalent of one New York-listed share.
Based on the guidance, the company could raise as much as HK$101.2 billion (US$13 billion) if the full allocation of 575 million shares is taken up, making it the biggest offering globally so far this year.
Alibaba, owner of South China Morning Post, will price its global offering later today, or no later than November 25. The shares are expected to start trading on November 26, according to its listing prospectus.
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The secondary listing in Hong Kong will be a homecoming for the e-commerce giant more than five years after it completed a US$25 billion share sale in New York, giving the Asian financial centre a shot in the arm amid a political crisis and an economic slump.The process gives Alibaba's millions of customers in Asia a chance to own in the technology champion.
The size of Alibaba's offering will push the local bourse to the top of global IPO league table in 2019, above the New York Stock Exchange and Nasdaq.The operator of online trading platform offered 500 million shares in its secondary listing plan, allocating 12.5 million to retail investors in Hong Kong and 487.5 million to international investors. Both portions may be increased, depending on demand.
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China International Capital Corporation (CICC) and Credit Suisse are the sponsors for the secondary offering in Hong Kong.
Investors in Hong Kong have borrowed a total of HK$13.3 billion in margin financing to subscribe for the shares, representing an oversubscription of 4.5 times, some stockbrokers estimated. Bright Smart Securities, the most active retail broker in local IPO margin financing, offered HK$3.2 billion, it said. The retail offering via cash subscription will remain open until noon local time today.
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Still, Alibaba and other companies with so-called weighted voting rights will not be able to join the Hang Seng Index until at least May next year at the earliest, according to index compiler Hang Seng Indexes.
"We will have a consultation in the first quarter on whether to add any weighted voting rights companies or secondary listing companies into the Hang Seng Index," Vincent Kwan Wing-shing, chief executive of Hang Seng Indexes, said in a phone interview. "We will announce the conclusion in May next year."
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