Alibaba’s historic Hong Kong listing raises US$12.9 billion

HONG KONG – Chinese e-commerce giant Alibaba Group has raised up to $12.9 billion in a landmark listing in Hong Kong, the largest share sale in the city in nine years and a world record for a cross-border secondary share sale.

Alibaba’s deal comes amid a late-year rush of share sales, with Saudi Arabia’s state oil giant Aramco revving up to price an initial public offering so large it threatens to eclipse Alibaba’s own record $25 billion float in 2014.

Hong Kong’s army of small investors have welcomed the Alibaba deal, subscribing for 40 times the shares they were originally allotted, according to two sources with direct knowledge of the deal.

This represents the heaviest oversubscription rate for any multi-billion-dollar share sale in Hong Kong in more than four years, according to Dealogic data.

Retail investors will now take 10% of the deal, up from the 2.5% they were originally allotted.

Hong Kong operates a ‘clawback’ system where heavy oversubscription from small investors can result in them getting a greater share.

The deal will be seen as a boost to Hong Kong following more than five months of anti-government protests and its recent slide into its first recession in a decade.

Alibaba said in a statement it had priced the shares at HK$176 ($22.49) each, a discount of 2.9% to its New York closing price.

The price means Alibaba will raise at least HK$88 billion ($11.3 billion) – a symbolic total because the number 8 is associated with prosperity and good fortune in Chinese culture.

Alibaba has also chosen the stock code 9988 for its listing, which for Chinese speakers combines two of the luckiest numbers, together symbolizing long-lasting prosperity.

The total raised from the deal could eventually reach $12.9 billion if a so-called ‘greenshoe’ over-allotment option were exercised.

The float by Alibaba is seen as particularly significant to Hong Kong since it lost the company’s IPO to New York in 2013 because the Asian financial hub would not then accept its unusual governance, where a self-selecting group of insiders control the majority of board seats.

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