Investments

Alibaba Considers Raising $20B Via New Hong Kong Listing

Alibaba, the Chinese eCommerce giant, is reportedly mulling raising $20 billion in a second Hong Kong listing. Bloomberg, citing people familiar with the matter, said Alibaba is currently working with financial advisors on the offering. The company wants to file a listing application as early as the second half of this year. The aim of the second listing, coming off its record-breaking listing in 2014, is to diversify its funding channels and enhance its liquidity.

The plans could still fall apart, though, reported Bloomberg. 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.

Alibaba declined to comment on the report. It’s market capitalization currently stands at $400 billion.

The potential listing comes as the Chinese economy is seeing slower growth, and is embroiled in a fierce trade war with the White House. In the middle of May, President Donald Trump slapped tariffs on $200 billion worth of products from the country, and added Huawei to the blacklist. That is expected to cripple the company, which won’t be able to do business with U.S. companies.

It also comes as Alibaba is still enjoying strong growth. Earlier this month, it reported headline numbers that topped the Street, with double-digit growth in core commerce operations that accelerated from last quarter’s rate. Digging down into the details, the data shows that revenues of  ¥93.5 billion ($13.6 billion USD) beat the Street by about $600 million, and were up 51 percent year on year, where that pace had been 43 percent in the last quarter of 2018. Adjusted earnings of $1.28 beat the Street by $.33. Adjusted for acquisitions, top-line growth was 39 percent.

In a conference call with analysts, and in presentation materials detailing the quarter’s numbers, total core commerce was the bulk of top line at  ¥78.8 billion, and gross merchandise volume was ¥5.7 trillion.

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