Chinese e-commerce company Alibaba Group (NYSE: BABA) is ready to bet on Hong Kong. The company wants to raise at least $11 billion through an IPO on the Hong Kong Stock Exchange.
Alibaba to list on Hong Kong Securities Exchange
The decision to list in Hong Kong comes at a time when the city is experiencing tension, having been rocked with anti-government protests. The move is strategic, and it could help the company hedge against growing scrutiny from the US on Chinese companies.
Daniel Zhang, the Chairman of Alibaba, stated that Hong Kong is a global financial hub. Despite the ongoing transition in the city, its prospects remain bright. According to insiders in the company, the ongoing political unrest in the city was not in play when deciding to list the shares
In 2014 the Chinese tech giant listed on the New York Stock Exchange in a record-breaking IPO raising $25 billion. At the time, the company decided against listing in Hong Kong as the first choice. This was because HKSE regulations did not allow dual-class capital structures. The HKSE has now relaxed the regulations allowing dual-class shares common.
Preparing for possibility US banning listing of Chinese companies
The move to list on HKSE could be seen as a way of hedging against the possibility of Chinese companies being banned from listing on the NYSE. The White House has mooted the possibility of banning listing of Chinese companies on the exchange. Equally, there could be locks and delisting on US pension funds investing in Chinese companies.
The move of listing the shares in HKSE is also a strategic move by Alibaba as tension and distrust between the US and China continue to grow. The HKSE IPO could attract several investors from Mainland China. However, the company has indicated that the New York Stock Exchange will remain as its primary listing exchange.
The move could also signify that despite the anti-government protests happening in Hong Kong that it is still open for business. The listing could serve as a distraction from the violence and turmoil that has rocked the city for months.