Alibaba readies its second listing pitch in hot year of tech IPOs

Photographer: Gilles Sabrie/Bloomberg

As Alibaba Group Holding Ltd. jumps in on a hot year for tech listings, it’s hoping to avoid repeating the high-profile flops of Uber Technologies Inc. and Lyft Inc.

The Chinese e-commerce giant has two things going for it that could help as it preps a potential second listing in Hong Kong: a profitable business and a history of returns for stock investors.

“Alibaba is profitable and has a great cash flow — its growth has been stellar,” said Hao Hong, chief strategist for Bocom International Holdings Co. “People wouldn’t perceive this kind of deal negatively.”

The company is considering seeking about $20 billion from a first-time share sale in Hong Kong, people with knowledge of the matter said this week. While Alibaba readies its pitch, most major tech listings globally over the past year are trading below their offer prices, with the average deal losing IPO investors 13%, data compiled by Bloomberg show.

Track Record

A rash of other tech companies including Postmates Inc., Slack Technologies Inc. and WeWork Cos. that are planning to sell shares in 2019 will be competing for investors’ attention. Alibaba’s track record in the public markets could give it a leg up over the other listing hopefuls.

Since Alibaba started trading in New York in 2014, its shares have more than doubled, giving the company a market value of about $398 billion. That compares with a 41% gain in the benchmark S&P 500 index over the same period. Coming to Hong Kong for a second listing will also allow Alibaba to tap the city’s legions of mom-and-pop investors, who are reserved a slice of every main board listing.

History shows how they can boost a deal. When Alibaba’s business-to-business marketplace listed in Hong Kong in 2007, retail punters placed orders for 257 times the amount of stock they were initially offered. That allowed Alibaba to increase the portion of shares set aside for them to a quarter of the entire deal, up from 15% initially.

The frenzy sent shares of Alibaba.com Ltd. soaring, ending their first day up 193%. While Alibaba took the unit private before later pursuing a group listing in New York, it may be hoping for a similar response this time around.

“The amount of the interest that Alibaba can gather from retail investors that invest in Hong Kong IPO shares is going to be enormous,” said Stephen Peepels, head of U.S. securities for Asia Pacific at law firm Hogan Lovells. “It’s going to have the world’s attention.”

Bloomberg

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.