Alibaba Group Holding Ltd. has reportedly registered one billion new American depositary shares (ADSs), suggesting that SoftBank Group Corp. may intend to sell some of its shares, according to Bloomberg on Monday. SoftBank has not yet commented on the matter.
Citigroup analysts including Alicia Yap said in a report that Japan’s SoftBank backed Alibaba before its initial public offering, so a large portion of its holdings in the company are not registered as ADSs. According to Citi’s calculations, SoftBank owns 5.39 billion ordinary shares in Alibaba, equivalent to 673.76 million ADSs, amounting to a 24.8% stake.
Citi analysts said the Alibaba filing with the US Securities and Exchange Commission (SEC) will allow the company’s stockholders whose shares have never been registered with the SEC to have the flexibility to sell their shares. The registration could also cover the company’s need to issue new shares for the employee equity incentive plan. Alibaba registered about 2 billion ADSs when the company conducted its IPO in the US in 2014.
Masayoshi Son’s SoftBank has been under pressure in recent months as the value of many portfolio companies have slid with a technological downturn. SoftBank’s shares have tumbled about 50% from their peak last year with the declining value of holdings, including Didi Global Inc., One 97 Communications Ltd. and DoorDash Inc.
SoftBank, which reports earnings Tuesday, has used buybacks in the past to bolster its own stock. Alibaba is by far its most valuable holding.
Alibaba’s Hong Kong shares dropped as much as 4.6%, while SoftBank’s stock rose as much as 5.4% in Tokyo.