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Alibaba Eyes Secondary Share Listing in Hong Kong (Report)

Alibaba offices
Courtesy of alibaba group

Alibaba may seek a secondary listing of its shares in Hong Kong to raise up to $20 billion, according to media reports. The Chinese e-commerce and entertainment giant is currently listed on the New York Stock Exchange, following an IPO in 2014.

Citing anonymous sources, Bloomberg said the company could file documents with the Hong Kong bourse in the second half of this year. That could mean a share sale late this year or in early 2020.

The tech giant has offered no comment, saying that it does not respond to market rumors. However, a similar report also appeared in the Alibaba-owned Hong Kong newspaper South China Morning Post.

“If Alibaba were to seek a dual stock listing, it would be for long-term reasons,” rather than because of something transient such as the U.S.-China trade war, a source close to the company told Variety. “It would more likely be for reasons of expanding the capital base, expanding the pool of shareholders to include such investors as can only invest in mainland stocks, and to extend the trading hours.”

A listing in Hong Kong would make it possible for mainland Chinese investors to have easy access to the shares, as Hong Kong and mainland China operate a so-called stock-connect scheme permitting cross-border share-trading. Few Chinese, except professional investors, are currently able to invest in Alibaba’s ADR shares on the NYSE.

At the time of Alibaba’s IPO five years ago, Hong Kong stock regulators did not permit the listing of companies with the two-tier share structures common to tech firms built with little capital from the founders, where management control is retained through a class of preferred shares. Alibaba was seen in Hong Kong as the one that got away, and since then, Hong Kong financial authorities have softened listing rules in order to attract more tech and biotech enterprises. Meituan Dianping and electronics group Xiaomi have both taken advantage of the new policy.

Alibaba shares were sold at $68 apiece in September 2014. On Friday before Monday’s Memorial Day holiday, Alibaba shares closed at $155, giving it a market capitalization of $402 billion.