Chinese e-commerce giant Alibaba is preparing for the biggest listing of the year on the Hong Kong Stock Exchange. According to sources, the company will price its shares at 176 Hong Kong Dollars (approx. $22). The price of the institutional shares is expected to be the same as retail shares.
A small discount on US listing
With its 176 Hong Kong dollar price tag, the company is offering its shares at a mere 3% discount compared to its US listing. The secondary listing was approved by Hong Kong regulators last week. The company may release the retail price of its share on Wednesday but are likely to be in line with its institutional offering, according to sources. The e-commerce company previously said that the retail price of the shares would not be higher than 188 Hong Kong dollars.
The bank will float 500 million new regular shares in the market, of which only 50 million will be available for retail investors. Its underwriting banks will get a greenshoe option of an additional 75 million shares. It will allow them to share more shares than they initially agreed upon. If the underwriters exercise this option, they will add at least $12.9 billion to the listing at the price of 176 Hong Kong dollars per share. The only other listing that could overshadow Alibaba is that of Saudi Aramco, a state-backed oil company from the Kingdom of Saudi Arabia. The listing could be worth at least $1 trillion as the company releases a small portion of its shares to the public. The company will list in Riyadh by the end of the year.
Alibaba’s effect on Hong Kong
Reports suggest that Alibaba has received an overwhelming response from investors and has stopped taking new orders from institutional investors. The shares will be available for trade-in Hong Kong starting November 26.
Hong Kong has been the epicenter of mass-scale protests against the Chinese government. Business and daily life in the region has been affected because of the friction between people and authorities. Some experts worried if the timing of Alibaba’s listing in Hong Kong is right. However, the company’s idea to barge in on the listing suggests that it is not nervous with the ongoing protests.
The local economy shows signs of a recession. Despite this, new listings brought in $22.6 billion during 2019. The city was the top spot for listing IPOs in 2015, 2016 and 2018.