Chinese technology giants Alibaba and Xiaomi are mulling floats on the Hong Kong Stock Exchange this year, while shares of Tencent Holdings sail high.
Having the three leading tech giants from the mainland is possible after Alibaba said it would consider a secondary listing in Hong Kong. The group staged a US$25-billion public float in New York in 2014 after Hong Kong refused to accept its governance structure – but much has changed since then.
Meanwhile, Xiaomi Inc prefers Hong Kong over the United States for its $200 billion initial public offering (IPO) later this year.
Hong Kong is set to allow dual-class shares under rule changes to be proposed by the city’s stock exchange, as it raises the stakes in its battle against New York for blockbuster initial public offerings (IPOs) from China, Reuters said on Tuesday.
Last month Hong Kong Exchanges and Clearing (HKEx)’s relaxed its rules on dual-class share systems, which allow different classes of shares with different voting power, then invited new economy companies like Alibaba and Xiaomi to raise capital in Hong Kong.
Mainland companies appear to feel more welcome in Hong Kong than in the United States in the modern era of Trump and Xi.
Ask Alibaba, whose subsidiary Ant Financial failed to obtain approval necessary from the Committee on Foreign Investment in the US to buy MoneyGram after a year of lobbying.
Alibaba chairman Jack Ma felt his investment would be welcomed in Hong Kong. At an inauguration ceremony of the Hong Kong Association of Zhejiang Entrepreneurs on Monday, Ma was asked three times by Hong Kong SAR chief executive Carrie Lam to consider listing in Hong Kong.
Ma said: “Alibaba will take this message. We will definitely consider Hong Kong’s market. We hope we can further invest in Hong Kong and enhance our participation in the city’s economy.”
Alibaba Group considered a dual-listing in New York and Hong Kong in 2014, but the Hong Kong listing rule did not allow a shareholding structure that permits a founder with a minority shareholding such as Ma to appoint more than half of his board members.
More ‘unicorns’ wanted
But the restraint was lifted by HKEx in an effort to encourage more “unicorns” – startup companies worth more than a billion dollars – to list after Hong Kong dropped to number three last year among global IPOs after New York and Shanghai.
Xiaomi, one of the world’s largest companies, will be HKEx’s main target.
Chairman Lei Jun started talking to investment banks last November for a potential $200 billion listing of the mainland electronics and software giant and it appeared that Xiaomi preferred Hong Kong over New York because their products are more familiar in Hong Kong, according to local papers.
Xiaomi’s profit is expected to double to $2 billion this year with revenue of over 100 billion yuan ($15.38 billion) in 2017, they said.
Xiaomi might also note that Huawei’s US expansion plan was thwarted by AT&T, which opted not to distribute its Chinese smartphones in time for the annual Consumer Electronics Show.