Published: Wed, November 13, 2019
Markets | By Otis Pena

Alibaba to spend more on travel, entertainment after $13.4bln listing

Alibaba to spend more on travel, entertainment after $13.4bln listing

According to a document filed with the U.S. Securities and Exchange Commission (SEC), Alibaba plans to offer 500,000,000 ordinary shares as part of a global offering, made up of 487,500,000 ordinary shares and a Hong Kong public offering of 12,500,000 ordinary shares initially.

The South China Morning Post noted that Hong Kong's government has pushed Alibaba hard, with Chief Executive Carrie Lam personally calling on the company's co-founder and former executive chairman Jack Ma to persuade him to consider a listing there.

The Financial Times reported on Wednesday that the retail giant won approval to list in Hong Kong, will confirm the share price on November 20, and go public on November 25.

Hong Kong stocks dropped almost 2% on Wednesday, led by declines in property shares, as protests spread across the city.

The share sale, set to be Hong Kong's largest in more than nine years, is a boost for the city, which has sunk into its first recession in a decade as more than five months of street protests and worries about the US-China trade war took their toll.

A dual listing in NY and Hong Kong would allow the shares to be traded on a full-day cycle, reflecting investor sentiment in real time. A separate source close to Alibaba told Caixin last week the company is aiming to raise between $10 billion and $15 billion in the offering. Including a typical "greenshoe", or overallotment option, to sell some extra shares, the sale could raise up to US$13.4 billion.

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Alibaba's share sale marks a triumph for Hong Kong stock exchange that lost many of China's brightest technology stars to United States rivals.

But Alibaba ultimately abandoned Hong Kong after local regulators refused to allow a dual-class shareholder structure that would have given control of the company to its core managers. It's NY offering was the largest IPO at $25 billion, a title it could lose to Saudi Aramco later this year.

The oil producer is expected to raise between $20 billion and $40 billion in an IPO expected to price in the coming weeks. However, the company has been looking to expand its Chinese customer base beyond its core market in big cities to less developed areas to combat slowing retail sales growth.

Even at the low end of that range, the offering would be the largest for Hong Kong this year. Ltd.in new markets such as food delivery and travel.

The hearing with stock market operator Hong Kong Exchanges & Clearing Ltd. occurred on Tuesday, the source said, speaking on condition of anonymity because of the sensitivity of the issue.

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