Alibaba To Offer Public Shares Again, Plans Hong Kong Listing To Raise $20B

China’s e-commerce giant Alibaba Group Holding Ltd may go for a second listing in Hong Kong to raise $20 billion.

The deal is expected to take China’s largest company closer to investors in the home country at a time the trade war between the U.S and China is raging.

Alibaba made its debut listing in New York stock exchange in 2014 and raised $25 billion.

According to reports, Alibaba is currently working with financial advisers on the planned offering and the listing in Hong Kong may happen by the second half of 2019.

The second listing is reportedly for "diversifying funding channels and boosting liquidity."

“A large part of it is politics, especially because of the timing,” commented David Dai, a Hong Kong-based analyst.

Dai added that better valuation in the Hong Kong market can be one of the factors behind the move.

Alibaba’s success in China has been similar to that of Amazon’s saga in the United States. Innovations like AliExpress, also known as Alibaba Express as digital retail service to expose small businesses to international online buyers as in eBay made the retail giant more popular.

As a result, the market value has grown to around $400 billion and the Alibaba stock is also up 13 percent in 2019.

More about homecoming than liquidity

Bloomberg intelligence calls the second listing as more of a homecoming than a quest for liquidity boosting.

It notes the company already has $29 billion cash in hand as of March. Adding to it is the $22 billion operating cash flow generated in fiscal 2019.

The analysis observes access to China-based funds via Hong Kong listing is more useful as the native audience has more understanding of Alibaba’s business model.

In 2014, Alibaba raised $25 billion in New York stock exchange in the largest initial public offering. It moved to New York after failing to persuade Hong Kong regulators to approve its unique management structure, which had close partners deciding on board membership. But Hong Kong did not relent.

However, in 2018, Hong Kong’s exchange relaxed norms to allow dual-share classes. As a result, it is becoming a popular destination for new listings.

Internet services major Meituan Dianping and smartphone maker Xiaomi has been allowed to issue stock despite different voting rights.

According to observers, the second listing’s time is more significant as many Chinese tech firms are facing hostility in the U.S.

Case in point is Huawei that was placed on the ‘entity list’ or blacklist by the Commerce Department.

That made American companies to obtain approval from the government for doing business with that Chinese company.

Recently, SMC, China’s largest chipmaker announced delisting from the NYSE to focus on its Hong Kong listing.

Alibaba refused to comment on the news.