Market Overview

Reports: Alibaba Delays Hong Kong IPO Plans

Reports: Alibaba Delays Hong Kong IPO Plans

Chinese e-commerce giant Alibaba Group Holding Ltd (NYSE: BABA) is no longer interested in listing its stock on the Hong Kong exchange amid large-scale protests in the region, sources told Reuters.

What Happened

Alibaba was reportedly interested in raising up to $20 billion through listing its stock in Hong Kong. But the three-month long protests in the region created a new environment of political and market instability, sources told Reuters. A decision to scrap its Hong Kong IPO was completed in the past few days and approved by the board.

The Wall Street Journal similarly reported Thursday its sources are also saying Alibaba scrapped its IPO plans.

Why It's Important

Mainland Chinese citizens are able to buy shares of companies listed on Hong Kong's exchange and Alibaba's filing would open itself to new investors and potentially a higher valuation. However, the tense political situation between China and Hong Kong would be seen as a Chinese company "offering Hong Kong such a big gift."

"It would be very unwise to launch the deal now or anytime soon," the source told Reuters.

A second source told Reuters Alibaba's management isn't looking at its decision as "a blow." The listing was considered more as a tool to "diversify its access to capital markets" and isn't core to its operations.

What's Next

Hong Kong stock exchange CEO Charles Li said last week he's confident companies will be able to "find a home" in the region although he doesn't know when, according to Reuters.

Alibaba closed Wednesday's session at $175.24 per share.

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Photo credit: Andy Mitchell, Flickr


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