This deal marks the largest share sale in Hong Kong in nine years and a world record for a cross-border secondary share sale. It’s also a benefit to Hong Kong as anti-government protests continue, and the city experiences its first recession in 10 years.
Investors in Hong Kong subscribed for 40 times the shares they were originally allotted, two sources with direct knowledge of the deal told Reuters. The publication said it is “the heaviest oversubscription rate for any multi-billion-dollar share sale in Hong Kong in more than four years, according to Dealogic data.”
Alibaba picked 9988 for its stock code, numbers in China that mean long-lasting luck.
Shares will be priced at 176 Hong Kong dollars ($22.49) each, a discount of 2.9 percent to its New York Stock Exchange closing price, Alibaba said in a statement.
Alibaba closed in New York on Nov. 19 at $185.25. One of Alibaba’s New York-listed American Depositary Shares (ADS) is equal to eight Hong Kong shares.
According to analysts, the price represented a 3.7 percent discount to Alibaba’s share price on the day before the deal was launched, Nov. 12.
“I was expecting it to be done at around 4 percent to 5 percent, so this is about right,” Sumeet Singh, head of research at Aequitas, told Reuters. “The deal represents just about 4.4 days of three-month average daily value traded, and hence, relatively, it’s not a big deal for a stock of Alibaba’s size.”
Retail investors will now take 10 percent instead of the 2.5 percent they were originally allotted.
In 2013, Hong Kong lost Alibaba’s IPO to New York due to its governance that allows a “self-selecting group of insiders” to control most board seats. Hong Kong ended up changing its own rule last year, making this listing possible.
Alibaba’s 2014 IPO stock price opened at $92.70 per share on the NYSE, 46 percent higher than the $68 the company had predicted.