Alibaba Group has delayed its much-awaited listing in Hong Kong that could help the company to rake in up to $15 billion. The deal was initially set for late August, but was postponed due to political tension in the Asian financial hub, two people with knowledge of the matter told Reuters.
The decision to postpone the deal was taken at a board meeting before Alibaba’s latest earnings release last week. The delay is due to the lack of financial and political stability in Hong Kong amid more than 11 weeks of demonstrations which have plunged the city into turmoil, according to Reuters’ sources.
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No date has been confirmed as of yet but Alibaba could launch the Hong Kong deal as early as October, seeking to raise $10-$15 billion, when political tensions ease and market conditions become favorable again.
Following the unprecedented airport shutdown perpetrated by protesters, Hong Kong’s stock market fell to a seven-month low last week.“It would be very unwise to launch the deal now or anytime soon,” the first person said. “It would certainly annoy Beijing by offering Hong Kong such a big gift given what’s going on in the city,” the source added.
The deal, potentially the world’s biggest equity deal of the year, would give Alibaba the funds to keep investing in frontier technologies. The company, however, “does not see the postponement as a blow.” The listing is not core to Alibaba’s business but is rather a way to “diversify its access to capital markets”, the second person said.
A Hong Kong listing would bring Alibaba closer to investors at home in China, who have been restricted from buying equity in the US-listed e-commerce giant. It would take advantage of a rule change by the Hong Kong Stock Exchange from last year, allowing dual-class technology stock listings.