Despite political unrest in Hong Kong, the Chinese e-commerce giant has finally made its stock market listing in IPO in the country. Rising up to $13.4 billion, the largest deal in the city since 2010, this is biggest cross-border IPO listing.
A few weeks before, a senior executive at the Hong Kong investment bank scoffed the idea of the deal happening by the end of the year with the dramatic scene happening on the streets of the country. "They want to see some of this craziness subside,” the banker said of Alibaba, adding: “They don’t need the money.”
Now, the same banker is assisting the Chinese e-commerce company in carrying out the world's biggest equity listing.
Alibaba's debut in the IPO listing in Hong Kong despite increasing violence has prompted the company to inform its Hong Kong employees to work from home. According to stock experts, this speedy listing will push to minimise the risk from the political crisis.
The reason behind the listing-
According to analysts, this listing is to set the base outside the US, especially during the dispute of the US-China trade. Travis Lundy, an analyst at Quiddity Advisors who publishes on SmartKarma, tags this listing as "escape valve listing." "Investors can take delivery or buy and sell shares (in Hong Kong) should US-China relations worsen. This should be considered a non-negligible benefit for any US-listed Chinese company," he added.
Alibaba will start trading in Nov 26 in Hong Kong and will be benefiting from the Chinese demand. However, the Hong Kong listing deal is considered small compared to its $476 billion market capitalisation.
The reason not to list in Shanghai or Shenzhen-
For Alibaba, its home market is quite small. The e-commerce giant holds the record for listing biggest IPO with $25 billion New York in 2014. China, on the other hand, had the biggest IPO listing was of $7.3 billion in 2009 done by China State Construction Engineering Corp.
Beijing, on the other hand, is working towards assisting fast-growing start-ups at home.
Big Deal for Hong Kong-
This IPO listing by Alibaba was supposed to be done in the summer. However, due to political unrest, the listing was postponed. This listing is also the culmination of six-plus years of argument, consultations, and the rule of changes. However, some observers have questioned the timing of this listing.
"The political situation has got worse and it’s a big deal in weak market conditions,” said Fraser Howie, an independent analyst. “But it’s in China’s interest to maintain Hong Kong as a financial centre. If this goes through, China can say ‘Hong Kong is still functioning, we haven’t closed things down."
