Alibaba Raises Up to $12.9 Billion in Hong Kong Listing

In a landmark listing in Hong Kong, e-commerce giant Alibaba Group succeeded in raising up to $12.9 billion. This is the city’s largest sale in nine years and established a world record for a secondary share sale cross-border. Hong Kong experienced its first slide into recession in almost a decade after five months of anti-government protests. Thus, this deal would undoubtedly be a good one for the city. In a statement, the Chinese company Alibaba said that the shares had been priced at $22.49 each. This is a 2.9% discount as opposed to its closing price in New York.

Thanks to this price, Alibaba would be able to raise a total of $11.3 billion. This is quite a symbolic total because it is equal to HK$88 and according to Chinese culture, the number 8 brings good fortune and prosperity. Moreover, the Chinese firm also decided to list itself with the stock code 9988. For Chinese speakers, it is a combination of two of the luckiest numbers and together these numbers symbolize long-lasting prosperity. If they decide to exercise a so-called ‘greenshoe’ over-allotment option, they would be able to raise a total of $12.9 billion from the listing. On Tuesday, the closing share price of Alibaba’s shares in New York was $185.25.

One of the company’s American Depository Shares (ADS) listed in New York is equal to eight of its shares in Hong Kong. As per the last closing of Alibaba, the discount did come about to 2.9%. However, analysts noticed that considering the share price on November 12, a day before the launching of the deal, the share price was discounted by 3.7%. According to experts, they were expected the company to give a discount of 4% to 5% so this seemed quite appropriate. Such a discount is not a big deal for a company like Alibaba due to its size. Furthermore, it represents just 4.4 days of the average daily value traded over three months.

This deal by Alibaba comes amidst a rush share sales late in the year. Aramco, the Saudi Arabia’s state oil company, is getting ready to do its initial public offering so large that it could actually end up eclipsing Alibaba’s own record worth $25 billion, which was made in 2014. Aramco would be able to raise a total of $25.6 billion at its top price range, which would boost the company’s value to $1.7 trillion. However, it would still be short of the $2 trillion that the company had sought initially.

The Alibaba deal has been welcomed by the short army of investors in Hong Kong. According to sources who had direct knowledge of the deal, the investors subscribed 40 times the shares they had been allotted originally. According to statistics, this is the heaviest oversubscription rate in Hong Kong for any share sale in the last four years. Retail investors had been originally allotted 2.5% of the deal, but would now take 10%. These numbers indicate that the investors could put up $11 billion collectively to get shares of the Chinese ecommerce behemoth.