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 RussoNov 01,2019,01:10

Alibaba Group Holding Ltd. (NYSE: BABA) is planning its secondary listing as soon as November.

The e-commerce giant, based in Hangzhou, will aim to raise up to $15 billion in an initial public offering in Hong Kong,  Reuters reported on Wednesday. Previously, Alibaba was forced to delay its Hong Kong IPO in August, due to the continuous protests in the region.

Although The Stock Exchange of Hong Kong Ltd., remains down 6% since the commence of the protests, it rose 1.5% in September, compared to the prior month, as noted by Lou Haverty, a financial insider.

“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 this afternoon. As long as no major new issues erupt with the protestors, November makes sense to go to market, especially if they have strong momentum from Singles Day.

Singles day, the world’s largest shopping event hosted by Alibaba annually, takes place on Nov.11. On that day, Alibaba offers massive discounts on its products, through its platforms. Last year, Alibaba hit a record with $30.8 billion in sales from the event.

In the full fiscal year of 2018, Alibaba’s China commerce retail business, accounted for 71% revenue, which is powered by  China consumer spending, according to Haverty.

“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.

Alibaba set the bar for the world’s largest IPO in 2014, raising $25 billion on Wall Street. Despite Alibaba planning its IPO on Hong Kong, Haverty noted it doesn’t “necessarily” mean that it will shy away Chinese-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”

Shares in Alibaba slipped 86 cents to $176.67 per American depositary share on Thursday.