Alibaba Readies Hong Kong IPO Near Singles' Day

The e-commerce giant plans to finally become publicly traded in the protest-ridden city - on the month it hosts its annual Singles' Day shopping spree.

Anthony Russo
    Oct 31, 2019 5:00 PM  PT
Alibaba Readies Hong Kong IPO Near Singles' Day
author: Anthony Russo   

Alibaba Group Holding Ltd. (NYSE: BABA) is planning to debut in Hong Kong trading in November after months of delay in a deal expected to be worth $15 billion.

While the Stock Exchange of Hong Kong remains down 6% since the protests began, it rose 1.5% in September, which analyst Lou Haverty, creator of Financial Analyst Insider, took as a positive trend.

"Another positive sign was the recent issuance of Budweiser in late Sept which suggests there is still plenty of new issue demand," Haverty told CapitalWatch in an email on Thursday. 

As long as no major new issues erupt with the protestors, November will be an opportune time for the IPO, especially if Alibaba sees strong momentum on Singles' Day. The event is the world's largest sales festival hosted by Alibaba annually and concludes on Nov. 11, when the company offers massive discounts.

"Domestic Chinese consumer spending is still strong. This year's Singles Day will be an indicator of whether that demand is starting to slow. I don't know how many Chinese consumers have access to credit, but credit levels can extend consumer spending growth even in the face of a decline in GDP," Haverty told CapitalWatch.

Last year, Alibaba hit record sales of $30.8 billion on Singles' Day. 

Haverty also noted that Alibaba's IPO in Hong Kong doesn't "necessarily" mean that it will shy away China-based companies from listing in New York.

"Alibaba already raised equity capital in New York. Doing a secondary issuance on the Hong Kong market makes sense because it diversifies your capital sources. The company's primary operations are in China, so it makes sense to take advantage of the favorable capital market conditions and liquidity in Hong Kong," he said.

Alibaba set the bar in 2014 in the world's largest IPO worth $25 billion on Wall Street. Since then, Alibaba's leader Jack Ma repeatedly said that the stock of the company in New York has been undervalued.

The e-commerce giant, based in Hangzhou, was previously forced to delay the IPO due to the continuous protests in the trouble-ridden city.

On Thursday, the stock in Alibaba slipped 86 cents to $176.67 per American depositary share.