Alibaba Group Holding Ltd. is proposing raising $20 billion in Hong Kong via a second listing. The e-commerce giant is in talks with financial advisers on the projected offering, said some people with knowledge of the matter, who didn’t wish for their identity to be revealed, as the information is private.
Alibaba is aiming to file a listing application in Hong Kong secretly as soon as the second half of 2019, they added. A second listing is targeted at diversifying its funding platforms and boosting liquidity. The plans are preparatory and could be changed in the near future, they further added.
“A large part of it is politics, especially because of the timing.”, said David Dai, a Hong Kong-based researcher at Bernstein. “Another part of it is potentially better valuation in the Hong Kong Market.”
“They’ve always wanted to list in Hong Kong,” said John Choi, a Hong Kong-based analyst who works at Daiwa Capital Markets. “Alibaba is doing a lot of investments across different sectors and business, so the capital could help.”
In New York, Alibaba had raised $25 billion in the world’s highest initial public offering after failing to convince Hong Kong regulators to permit its unique structure, in which a coterie of partners determines the board membership.
Alibaba, which had nearly $30 billion cash as of March, has taken advantage of the Chinese online commerce coupled with surging affluent middle class. But, it is finding it tough to witness growth as the world’s second-largest economy slows, and is also engaged in a costly subsidy war with Meituan in the travel and food delivery industry. A Hong Kong listing decision may influence some investors to take the cash away from rivals like We Chat operator Tencent Holdings Ltd., and Meituan, and give it to Alibaba instead.