Shares in Alibaba jumped more than 6 per cent in their Hong Kong trading debut, after the technology group raised more than $11bn against a backdrop of simmering unrest and as the city’s future as a financial hub has increasingly come under pressure.
Minutes before the market opened and as riot police stood guard outside Hong Kong’s stock exchange, Daniel Zhang, the company’s chief executive, told an audience gathered at the stock exchange that Alibaba has “returned home to Hong Kong”, to a large round of applause.
The mammoth listing comes against a backdrop of Sino-US tensions. Five years ago Alibaba raised $25bn in New York in what was the world’s biggest ever initial public offering. The secondary listing will make it easier for investors in China and elsewhere in Asia to trade the shares.
“After five years of travelling afar, [Alibaba has] decided to come home,” said Charles Li, chief executive of Hong Kong’s stock exchange operator, at the event. “Despite the difficulties and challenges in Hong Kong.”
Mr Li added that he was confident that Alibaba’s listing would bring other Chinese companies listed overseas to list their shares in Hong Kong. “Ultimately they will come home. And we will be here, ready for them,” Mr Li said.
Alibaba’s shares opened 6.25 per cent higher at HK$187 ($23.90) on Tuesday, with the group raising HK$88bn ($11.3bn). The city’s benchmark Hang Seng index gained 0.4 per cent.
Analysts had not expected a sharp rise in the stock, partly because they were marketed at a small discount to the company’s New York Stock Exchange-listed American depositary receipts. Still, the shares were heavily oversubscribed on both institutional and retail tranches.
Alibaba’s New York-listed ADRs closed 2 per cent higher on Monday at $190.45. The new, Hong Kong-traded shares are fully exchangeable with the New York ADRs at a rate of eight-to-one.
The company had initially aimed to raise as much as $20bn when it filed for the listing in June, but the plans stalled and were eventually scaled back partly as a result of political crisis in Hong Kong.
Alibaba pushed ahead with the listing this month following record merchandise sales of $38bn on Singles’ Day, its annual online shopping extravaganza. It also posted a strong third-quarter performance that saw sales rise 40 per cent from a year ago.
The $11.3bn equity raising is easily the biggest offering of the year, coming in far above the $8bn raised by ride-hailing company Uber in New York in May.
If Alibaba’s investment bankers choose to trigger an overallotment option within one month of the listing, it would increase the number of shares offered to investors by a further 15 per cent and bring total fundraising to $12.9bn.
Credit Suisse and Chinese state-owned investment bank CICC co-sponsored Alibaba’s share sale.