Chinese eCommerce giant Alibaba is shelving an approximate $15 billion listing in Hong Kong due to growing political unrest, sources told Reuters on Wednesday (Aug. 21).
Alibaba’s Hong Kong plans are being eyed by the financial community as a litmus test for the Chinese-controlled business environment.
Although there isn’t a new plan in place, Alibaba sources said the company might consider rolling out the deal in October. The online marketplace is still seeking to raise $10 billion to $15 billion, reliant on the political climate.
The decision to delay the deal hinged on Hong Kong’s financial and political instability after more than 11 weeks of turmoil, the sources added.
Along with the Hong Kong Airport being shut down, more than 700 people were arrested and police fired over 1,000 rounds of tear gas, the report said.
“It would be very unwise to launch the deal now or anytime soon,” the source told Reuters. “It would certainly annoy Beijing by offering Hong Kong such a big gift given what’s going on in the city.”
Alibaba’s Hong Kong listing was slated to possibly be the world’s biggest equity deal in 2019.
Aside from political unrest in Hong Kong, the potential listing came at a time when the Chinese economy was slowing down, embroiled in a fierce trade war with the White House. In the middle of May, U.S. President Donald Trump slapped tariffs on $200 billion worth of products from the country and added Huawei to the blacklist. But the deal also came as Alibaba was in the midst of strong growth. Earlier in May, it reported double-digit growth in core commerce operations that accelerated from last quarter’s rate.
In 2014, Alibaba raised $25 billion selling shares on the New York Stock Exchange. It was the largest share offering and came after Alibaba experienced difficulty in getting Hong Kong regulators to approve its governance structure. In 2018, the Hong Kong exchange approved dual share classes, which have enabled the likes of Xiaomi to issue stock with different voting rights.