Alibaba Group, the New York-listed Chinese telecom giant, has reportedly filed a confidential listing application to Hong Kong Stock Exchange (HKEx), aiming to raise up to US$20 billion in the third quarter.
The Hangzhou-based company is said to have chosen China International Capital Corp and Credit Suisse as lead banks for its initial public offering in Hong Kong, according to a Bloomberg report. Alibaba’s spokesperson declined to comment on the report.
According to the HKEx’s rules, an IPO candidate needs to upload a listing prospectus to the stock exchange’s website before it goes through a hearing by the stock exchange’s listing committee. However, a company that has been listed in a foreign market can submit a confidential filing.
It is believed that Alibaba avoided American investment banks for its listing in Hong Kong because it has already been listed in the United States, Ronald Wan Ten-lap, the chief executive of investments in Hong Kong at Partners Capital International, was quoted as saying in a Hong Kong Economic Journal report. But Credit Suisse was obviously a top choice for Alibaba among European investment banks, Wan said.
As the deal size is massive, it will involve a dozen underwriters and sub-underwriters, which may include some US investment banks, Wan said.
Alibaba’s second listing is good news for Hong Kong, which failed to attract this well-known Chinese company for a listing in 2013, Edward Au Chun-hing, co-leader of Deloitte China’s National Public Offering Group, said. It also means that there will be a new round of new economy stocks set to go public in Hong Kong, including Alibaba’s subsidiaries, Au said.
Alibaba reportedly plans to raise US$20 billion in its Hong Kong offer, which would be the city’s largest fundraising since 2010 when AIA Group raised the same amount in its IPO.
However, IFR said sources believed it would be more realistic for Alibaba to try to raise only $15 billion this time, due to the current unfavorable market situation. Reuters said Alibaba’s fundraising size may be between $10 billion to $15 billion. If it is $15 billion, Alibaba will be the third largest IPO firm in Hong Kong after AIA and ICBC, which raised $21.8 billion in 2006.
But Alibaba could help boost daily transactions on the Hong Kong market by 10% to 15% and the HKEx would benefit from it, according to a Citibank research report. And if Alibaba’s listing in Hong Kong is successful, more US-listed Chinese firms would consider doing the same, which could help HKEx become a hub of new economy stocks.
Alibaba listed on the New York stock exchange in September 2014, raising US$25 billion, or $68 per share. It was unable to be listed in Hong Kong because its dual-class share structure was not accepted at that time. Credit Suisse was one of the main underwriters for Alibaba’s IPO in the US.