Unrest delays Alibaba IPO to October

Business | Reuters 22 Aug 2019

China's biggest e-commerce company, Alibaba Group Holding Ltd, has delayed its up to US$15 billion listing in Hong Kong amid growing political unrest, reports say.

The Hong Kong-listing plans of Alibaba, which was co-founded by tycoon Jack Ma, are being closely watched by the financial community for indications on the business environment there and provides a window into Beijing's reading of the situation.

While no new timetable has been formally set, Alibaba could potentially launch the deal as early as October, still seeking to raise US$10 billion to $15 billion, depending on whether political tensions had eased and market conditions became more favorable, a person with inside knowledge said.

The decision to postpone the deal, initially set to launch in late August, was taken at a board meeting before Alibaba's earnings release last week, a second person said.

The delay was due to the lack of financial and political stability in Hong Kong, the people added, following more than 11 weeks of frequently violent pro-democracy demonstrations.

Hong Kong's benchmark Hang Seng Index fell to seven-month lows last week.

"It would be very unwise to launch the deal now or anytime soon," the first person said. "It would certainly annoy Beijing by offering Hong Kong such a big gift, given what's going on in the city," the source added.

Preparations for Alibaba's listing, potentially the world's biggest equity deal this year and the largest follow-on share sale in seven years, have been under way for some time.

Earlier this year, Altaba, the Yahoo offshoot holding the company's stake in Alibaba, announced plans to sell up to its entire 11 percent stake, an event Alibaba would want to see completed ahead of its Hong Kong float to stabilize its US trading volumes before investors need to adjust to the two prices that would be available following a Hong Kong listing.

The Altaba sale has been completed, the second person said.

Alibaba declined to comment.

The second source said Alibaba views the Hong Kong deal as a way to "diversify its access to capital markets," but not as core to its business.

Meanwhile, a listing by Alibaba is a big deal for the Hong Kong stock exchange, which is lagging behind its New York rivals in the annual battle to be the leading global listings venue.

Last month Anheuser-Busch InBev cancelled a planned Hong Kong IPO of up to US$9.8 billion for its Asia Pacific unit.

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