Alibaba Group, Chinese e-commerce giant, has raised up to $12.9 billion in a landmark listing in Hong Kong.
The deal which will be seen as a boost to Hong Kong following more than five months of anti-government protests and its recent slide into its first recession in a decade, is the largest share sale in the city in nine years and a world record for a cross-border secondary share sale.
A news report by Reuters on the deal quoted the Alibaba’s New York-listed American Depository Shares (ADS) as saying in a statement that it had priced the shares at HK$176 ($22.49) each, a discount of 2.9% to its New York closing price.
The price means Alibaba will raise at least HK$88 billion ($11.3 billion) – a symbolic total because the number 8 is associated with prosperity and good fortune in Chinese culture.
This is even as the e-commerce giant has also chosen the stock code 9988 for its listing, which for Chinese speakers combines two of the luckiest numbers, together symbolizing long-lasting prosperity.
The total raised from the deal could eventually reach $12.9 billion if a so-called ‘greenshoe’ over-allotment option were exercised. Alibaba shares closed in New York on Tuesday at $185.25.
One of Alibaba’s New York-listed American Depository Shares (ADS) is worth eight of its Hong Kong shares.
While the discount to Alibaba’s last close was set at 2.9%, analysts noted the price represented a 3.7% discount to the Alibaba’s share price on Nov. 12 – the day before the deal was launched.
Sumeet Singh, head of research at Aequitas and who publishes on research website SmartKarma, said about the deal: “I was expecting it to be done at around 4%-5% so this is about right,” said
“The deal represents just about 4.4 days of three-month average daily value traded and hence, relatively it’s not a big deal for a stock of Alibaba’s size”, the analyst added.
Alibaba’s deal comes amid a late-year rush of share sales, with Saudi Arabia’s state oil giant Aramco revving up to price an initial public offering so large it threatens to eclipse
Alibaba’s own record $25 billion float in 2014. A deal at the top of Aramco’s price range would raise $25.6 billion and value the company at $1.7 trillion – short of the $2 trillion it had originally sought.
