Alibaba sets retail price for Hong Kong-listed shares

This article is co-written by Enoch Yiu.

Alibaba Group Holding has picked auspicious numbers for both its stock code and set the offer price for retail investors in its sale of new shares in Hong Kong, after receiving overwhelming response for the global tranche of its US$13.86 billion secondary listing.

Photo credit: moovstock / 123RF

The 12.5 million new shares in the Hong Kong retail offering will be priced at no more than HK$188 (US$24) each, the company said in an email statement on Friday. The international offering tranche of 487.5 million shares will be set by November 20 after a marketing process.

The size of the retail portion may be increased to as many as 50 million shares, subject to demand and a clawback mechanism. The final price will be set at the lower of the international offer price and HK$188, it added.

The stock’s code on the Hong Kong stock exchange is 9988, which rhymes with “prosperity forever.” The numbers eight and nine are considered auspicious in both Cantonese and Mandarin Chinese.

“During this time of ongoing change, we continue to believe that the future of Hong Kong remains bright,” Daniel Zhang, Alibaba’s executive chairman, said in a letter to investors on Friday. “We hope we can contribute in our small way and participate in the future of Hong Kong.”

Alibaba, the record holder of the largest global initial public offering, unveiled a secondary listing plan in Hong Kong earlier this week in a vote of confidence for the local financial market as the worst political crisis in the city’s history threatens its status as a global financial center.

The ecommerce giant and owner of South China Morning Post is offering 500 million new shares, according to a prospectus filed in New York. The plan includes an option for the underwriters to take up an extra 75 million shares subject to demand. Alibaba’s depositary shares in New York rose 0.2% to US$182.80 on Thursday.

The listing comes as a major boost for the city gripped by more than five months of anti-government protests and a simmering US-China trade war, pushing the local stock exchange on a home run for global IPO crown this year in competition with the New York Stock Exchange and Nasdaq.

It also gives Alibaba’s customers – who number in the hundreds of millions, spending a record US$38.38 billion in 24 hours of online shopping – a chance to become stakeholders in China’s technology champion.

The listing underpins Alibaba’s ambition to stay in business for 102 years so that it crosses three centuries since its establishment in 1999, as it looks to expand beyond its home base.

“Our longer-term goals by the year 2036 are to serve 2 billion consumers globally, create 100 million jobs, and provide the necessary infrastructure to support 10 million small businesses to become profitable on our platforms,” Zhang said in an earlier letter to staff on Thursday. “We are rooted in China, but we must think globally.”

The secondary listing marks a return for the technology company, whose businesses have broadened into cloud computing, big data, financial services, and logistics, besides stakes in hundreds of technology startups involved in everything from AI to electric vehicles. Alibaba chose to raise US$25 billion in New York in 2014, handing that year’s global IPO crown to the city, after failing to meet Hong Kong’s listing requirements.