Alibaba Files for a Hong Kong Mega-Listing

Lulu Yilun Chen
Alibaba Files for a Hong Kong Mega-Listing

(Bloomberg) -- Alibaba Group Holding Ltd. has filed confidentially for a Hong Kong listing, people familiar with the matter said, moving closer to what is potentially the city’s biggest share sale since 2010.

The online emporium filed a stock listing application with the exchange this week without the need for financial disclosures, the people said, requesting not to be named because the matter is private. It is said to have picked China International Capital Corp. and Credit Suisse Group AG as lead banks. The offering from China’s largest corporation could raise as much as $20 billion, though Alibaba hasn’t finalized its fundraising target, the people said. An Alibaba representative declined to comment.

Alibaba -- which had roughly $30 billion of cash as of March -- has ridden a surge in Chinese online commerce alongside an increasingly affluent middle class. But it’s struggling to sustain growth as the world’s No. 2 economy slows, and China clashes with the U.S. over trade.

The deal could help finance a costly war of subsidies with Meituan Dianping in food delivery and travel, and may also divert investor cash from rivals like Meituan and WeChat-operator Tencent Holdings Ltd. The transaction could also bolster the city’s status as a destination for Chinese tech listings and boost the online retailer’s cash pile.

News of Alibaba’s filing sent shares in affiliated firms soaring. New Huadu Supercenter Co. and Sanjiang Shopping Club Co., both backed by the e-commerce giant, rose by their 10% daily limits on mainland exchanges. China TransInfo Technology Co., in which an Alibaba affiliate will take a 15% stake, gained as much as 5.4% in Shenzhen. And CICC climbed as much as 1.8% while the Hong Kong market was down a tad.

A successful deal will rival AIA Group Ltd.’s 2010 IPO as Hong Kong’s largest-ever share sale, a triumph for a city that’s ceded many of China’s largest corporations to U.S. exchanges. Alibaba raised $25 billion in New York in the world’s largest initial public offering after struggling to persuade Hong Kong regulators to approve its unique structure.

In the Hong Kong offering, the company will seek to preserve its existing governance system, where a partnership of top executives has rights including the ability to nominate a majority of board members, a person has said. Under new rules for secondary listings introduced by the Hong Kong bourse last year, the company can apply for an exemption to standard restrictions in the city that would bar that kind of setup.

The monster share sale comes as Chinese companies grapple with rising tensions between Beijing and Washington, and an increasingly hostile U.S. government that’s slapped export curbs on Huawei Technologies Co. and is considering similar restrictions against a clutch of artificial intelligence firms. A Hong Kong offering may have the benefit of tightening Alibaba’s ties with Beijing, in addition to the money raised.

Yet while China has supplied some of the world’s biggest initial public offerings over the last 12 months, it’s also been home to major disappointments. Xiaomi -- the first firm to list with a weighted-voting right structure in Hong Kong -- has tumbled more than 40% since its July debut. This year, games-streaming giant Douyu International Holdings Ltd. postponed its U.S. IPO launch following market jitters over a trade war.

(Updates with share action from the fifth paragraph.)

--With assistance from Zhen Hao Toh.

To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net

To contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Edwin Chan

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