Alibaba Still Hopes to List in HK

The House News

3rd October 2013

Alibaba Still Hopes to List in HK, Jack Ma Changes Strategy for Second Round of Lobbying

阿里巴巴未棄港上市 馬雲改策略再游說

A number of international media have reported in the last week that Alibaba had given up on listing in Hong Kong and seeks for a flotation in the US as it wants to preserve its “partnership” structure. However, it looks like Alibaba has not given up its plan to list in the Hong Kong Stock Exchange yet! Alibaba, according to source, has been meeting with columnists trying to persuade them the advantages of its “partnership” structure, and emphasised that Alibaba has “emotional attachment” to Hong Kong. Hong Kong Economic Journal today reported that Alibaba’s board Chairman Jack Ma has been visiting Hong Kong in order to adjust the company’s communications strategy and improve the company’s image. Chances are Alibaba can still list in Hong Kong.

Alibaba has been contacting influential figures in the market including columnists who crticised the “partnership” structure, despite news reports about its attempt to list in the New York Stock Exchange. Alibaba said to these individuals that Alibaba has once listed in Hong Kong and is emotionally attached to Hong Kong, hence it’s trying to list in Hong Kong again. Alibaba also emphasised that its partnership structure can maintain the company’s innovative culture.

According to Hong Kong Economic Journal’s report, Jack Ma is in Hong Kong today. Market rumours suggested that Ma is investigating the possibility of listing in Hong Kong with relevant individuals.

Although global newswires have reported that Alibaba will appoint underwriters and arrangers for the IPO, according to Hong Kong Economic Journal, this is only Alibaba’s attempt to “threaten” the Hong Kong regulator to compromise.

Alibaba has urgent need to raise money, according to HKEJ. Nine investment banks including Deutsche Bank, Citibank and DBS offered a US$4 billion consortium loan to Alibaba last year for it to buyback the 50% stake of the company from Yahoo. The first installment is due by end of this year, and the second installment will be due by end of March 2014. The newspaper estimated that Alibaba will fight to list before March 2014.

In order to make sure that its partnership structure can be accepted by the Hong Kong regulator, Alibaba has been approaching market influence. A source said that Alibaba does not only explain the partnership structure to the market influence, but also repeatedly said that if Hong Kong looses Alibaba the capital market trade volume will be way behind other markets and that the Hong Kong Stock Exchange should accommodate its partnership structure. However, the lobbying achieved no success and those who publicly support Alibaba’s listing in Hong Kong are far and few between.

Alibaba’s partnership structure allows around 30 partners of the company to nominate over 50% of the company’s board, which breaches the equal shareholder’s right of Hong Kong’s capital market system. A number of local media have quoted sources that the SFC will refuse to allow Alibaba’s partnership structure proposal to go through, whilst the Hong Kong Stock Exchange hopes that Alibaba could adjust some of the details of its proposal. It is unclear that whether Alibaba will compromise.

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