Alibaba Culture and Entertainment Group
A woman walks past signs of Alibaba Culture and Entertainment Group and video-streaming platform Youku, at the recent Beijing International Cultural and Creative Industry Expo. Alibaba has ridden a surge in Chinese online commerce alongside an increasingly affluent middle-class. Image Credit: Reuters

Hong Kong (Bloomberg): Alibaba Group Holding Ltd. has filed confidentially for a Hong Kong listing, moving closer to what is potentially the city’s biggest share sale since 2010.

The online emporium filed a stock listing application with the exchange without the need for financial disclosures. It is said to have picked China International Capital Corp. and Credit Suisse Group AG as lead banks.

The offering from China’s largest corporation could raise as much as $20 billion, though Alibaba hasn’t finalized its fundraising target.

$20b

Likely amount to be raised from Alibaba’s Hong Kong listing

Alibaba - which had roughly $30 billion of cash as of March - has ridden a surge in Chinese online commerce alongside an increasingly affluent middle-class. But it’s struggling to sustain growth as the world’s No. 2 economy slows, and China clashes with the US over trade.

The deal could help finance a costly war of subsidies with Meituan Dianping in food delivery and travel, and may also divert investor cash from rivals like Meituan and WeChat-operator Tencent Holdings Ltd. The transaction could also bolster the city’s status as a destination for Chinese tech listings and boost the online retailer’s cash pile.

News of Alibaba’s filing sent shares in affiliated firms soaring. New Huadu Supercenter Co. and Sanjiang Shopping Club Co., both backed by the e-commerce giant, rose by their 10 per cent daily limits on mainland exchanges. China TransInfo Technology Co., in which an Alibaba affiliate will take a 15 per cent stake, gained as much as 5.4 per cent in Shenzhen.

A successful deal will rival AIA Group Ltd.’s 2010 IPO as Hong Kong’s largest-ever share sale, a triumph for a city that’s ceded many of China’s largest corporations to US exchanges. Alibaba raised $25 billion in New York in the world’s largest initial public offering after struggling to persuade Hong Kong regulators to approve its unique structure.

While China has supplied some of the world’s biggest initial public offerings over the last 12 months, it’s also been home to major disappointments. Xiaomi - the first firm to list with a weighted-voting right structure in Hong Kong - has tumbled more than 40 per cent since its July debut. This year, games-streaming giant Douyu International Holdings Ltd. postponed its US IPO launch following market jitters over a trade war.

Alibaba to retain unique corporate structure
In the Hong Kong offering, the company will seek to preserve its existing governance system, where a partnership of top executives has rights including the ability to nominate a majority of board members. Under new rules for secondary listings introduced by the Hong Kong bourse last year, the company can apply for an exemption to standard restrictions in the city that would bar that kind of setup.