Chinese e-commerce giant Alibaba was formed in the Hangzhou flat of co-founder Jack Ma in 1999.
Alibaba Group Holding, now with a market capitalisation inching closer to $500bn, logged more than 268bn yuan ($38.3bn) of purchases during its Singles’ Day bonanza, exceeding last year’s record haul after a 24-hour shopping marathon.
Alibaba is now the most valuable public Chinese company and one of the top-10 most valuable in the world, though still trailing US e-commerce counterpart Amazon, which is worth around $870bn. The company has in recent years taken steps to go global, primarily in Southeast Asia where it runs the Lazada e-commerce platform.
Alibaba pulled off the biggest-ever initial public offering on the Wall Street five years ago. Just as the company is looking to raise billions more now in Hong Kong, where months of violent pro-democracy protests have unsettled investors and helped tip the city into recession, so fresh capital is not the only reason.
At the most basic level, it should bring the company at least $12bn – the biggest share sale in Hong Kong in nearly a decade, and about half the total raised in New York. Alibaba says it would use the proceeds to drive user engagement, improve operational efficiency and pay for continued innovation. It has also been trying to sustain growth at a time when the engines of China’s economy are sputtering and the country clashes with the US over trade.
Listing closer to home would fulfil a longtime goal of billionaire co-founder Ma.
Alibaba’s US stock price is up by a third this year, based on the November 14 close, and has been trading close to all-time highs. That will be a benchmark for the share price in Hong Kong.
For sure, Alibaba is not leaving the US behind. Hong Kong would be its secondary listing. In a filing with the US Securities and Exchange Commission, Alibaba said the New York Stock Exchange would continue to be its primary listing venue. Having two listings on opposite ends of the globe ensures a round-the-clock venue for investors to trade its shares.
A successful share sale would help Alibaba pay for a costly war with Tencent and Baidu Inc in cloud computing and entertainment, with Meituan Dianping in food delivery and travel and with everyone in terms of investing in promising startups that yield technology, talent or market share. And it could also divert investor cash from those rivals.
Today, China has the world’s largest online population — in excess of 850mn — most of them smartphone users deeply immersed in the country’s growing digital ecosystem and e-commerce.
Alibaba’s business has shown resilience even as archrival Tencent, the company behind social media giant WeChat, warned of a tough outlook. Alibaba’s success has seen it invest heavily in new business lines as well.
Just as tensions between Washington and Beijing continue to fuel uncertainty and roil global commerce, Alibaba is expected to better ride out the storm, thanks to booming online consumption in the world’s No 2 economy.
What started as a dream has now become one of the biggest e-commerce enterprises in the world.
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