Alibaba's books close early thanks to strong demand

Top News | Agencies and Avery Chen 20 Nov 2019

Alibaba has stopped taking orders from prospective institutional investors for its US$13.4 billion (HK$104.52 billion) secondary Hong Kong listing earlier than expected after attracting strong demand, two people with knowledge of the matter said.

Order books closed at 5pm yesterday, half a day earlier than planned by the Chinese e-commerce giant and its investment banking advisers.

The decision was made by the company on Monday. The final price that institutional investors will pay will be set by tonight, based on yesterday's closing price in New York. The Hong Kong shares are expected to be offered at a slight discount based on the US ones.

The institutional tranche of Alibaba's initial public offering was oversubscribed by three to four times, mainland media reported.

In the retail portion, 10 local brokers loaned about HK$13.6 billion in margin financing for Alibaba's IPO, equal to 4.6 times over-subscription of the retail tranche as of yesterday. The subscription period for retail investors will close at noon today.

Alibaba is issuing 500 million new shares and could raise US$13.4 billion after exercising the over-allotment option. It is due to start trading on the Hong Kong stock exchange on November 26.

Meanwhile, index provider MSCI said it would not implement any changes to Alibaba at the time of its Hong Kong dual listing. The company intends to implement changes to its number of shares and foreign inclusion factor on account of this primary offering in its February 2020 quarterly index review.

Separately, Ant Financial, a payment affiliate of Alibaba, said it might apply for a virtual banking license in Singapore, after receiving a permit from the Hong Kong Monetary Authority in May to operate a virtual bank in the SAR.

Another Alibaba-backed company, Chinese artificial intelligence startup Megvii Technology, is seeking listing approval in Hong Kong to raise between US$500 million and US$1 billion tomorrow.

However, Beijing-based Megvii, known for its facial recognition platform Face++, has yet to decide whether it will carry out a roadshow once approval is granted.

A source believes the company could successfully list in Hong Kong if it lowers its US$4 billion valuation, reflecting American blacklist risks, given that the current market condition is "not bad."

The US government last month placed Megvii and seven other Chinese companies on a trade blacklist over their involvement in Beijing's alleged repression of Muslim minorities in Xinjiang.

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