Chinese E-commerce giant raises $12.9 billion
Chinese E-commerce giant Alibaba Group
raised $12.9 billion (Euro 10 billion) in a landmark listing in Hong Kong, the
largest share sale in the city in nine years and a world record for a
cross-border secondary share sale.
The deal 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.
Alibaba said in
a statement it had priced the shares at HK$176 ($22.49) each, a discount of
2.9% to its New York closing price, confirming information earlier reported by
Reuters.
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.
Alibaba 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' the over-allotment option was exercised.
Alibaba shares closed
in New York on Tuesday at $185.25. One of Alibaba's New York-listed American
Depositary 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.
"I was expecting
it to be done at around 4%-5% so this is about right," said Sumeet Singh,
head of research at Aequitas and who publishes on research website SmartKarma.
"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."
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.
HONG KONG BOOST
Hong Kong's army of
small investors have welcomed the Alibaba deal, subscribing for 40 times the
shares they were originally allotted, according to two sources with direct
knowledge of the deal.
That represents the
heaviest oversubscription rate for any multi-billion dollar share sale in Hong
Kong in more than four years, according to Dealogic data.
Alibaba declined to
comment on retail subscriptions.
Retail investors will
now take 10% of the deal, up from the 2.5% they were originally allotted. Hong
Kong operates a 'clawback' system where heavy oversubscription from small
investors can result in them getting a greater share.
The numbers imply
retail investors collectively put up about $11 billion in the hope of getting
shares in the Chinese e-commerce champion.
A float by Alibaba is
seen as particularly significant to Hong Kong since it lost the company's IPO
to New York in 2013 because the Asian financial hub would not then accept its
unusual governance, where a self-selecting group of insiders controls the
majority of board seats.
That decision
ultimately resulted in Hong Kong rule changes last year that has allowed
Alibaba to conduct this listing.
Bankers hope other
U.S.-listed Chinese tech giants will follow suit.
Alibaba's listing the ceremony is due to be held at the Hong Stock Exchange next Tuesday and the event will be closely watched given the ongoing protests unfolding across the
city.
China International
Capital Corporation (CICC) and Credit Suisse are leading Alibaba's deal.
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