Alibaba Looks To Hong Kong For £16bn Secondary Share Offer

Alibaba is reportedly in talks to launch a secondary share offering in Hong Kong worth $20 billion (£16bn), in a move industry watchers said was likely to be related in part to trade tensions between the US and China.

The listing is officially intended to diversify Alibaba’s funding and boost liquidity, Bloomberg and others reported, citing unnamed sources.

The company is currently in talks with financial advisers and could list as early as the second half of this year, although the plans are still at a preliminary stage and could change.

In 2014 the Chinese e-commerce giant raised $25bn on the New York Stock Exchange with what is still the world’s biggest initial public offering.

New rules

The company had previously looked to list in Hong Kong, but at the time the city’s listing rules did not allow for Alibaba’s unusual corporate structure, which gives founding partners, rather than shareholders, control over board appointments.

Last year the Hong Kong exchange modified those rules to allow some Chinese companies already listed elsewhere to hold secondary offerings in the city even if their voting rights structures do not match local standards.

The shift was due in part to Alibaba’s decision to list elsewhere, the exchange said at the time.

Bernstein analyst David Dai told Bloomberg that “a large part” of the decision was related to trade tensions, although he and others said the listing could also give Alibaba a better valuation and help fund expansion plans.

Bloomberg analysts noted, however, that Alibaba already had $29bn in cash as of March and generated $22bn in operating cash flow in fiscal 2019.