HONG KONG / NEW YORK (Reuters) – China's largest e-commerce company Alibaba Group Holding Ltd has delayed listing up to $ 15 billion in Hong Kong amid mounting political turmoil in the Asian financial center, two people with knowledge of the matter told Reuters.
FILE PHOTO: An Alibaba Group logo is seen at an exhibition at the World Intelligence Congress in Tianjin, China on May 16, 2019. REUTERS / Jason Lee / File Photo
Alibaba's Hong Kong listing plans are closely followed by the financial environment for indications of the business environment in the Chinese-controlled territory and provides a window into Beijing's reading of the situation.
Although no new timetable has been set, Alibaba could start the Hong Kong deal as early as October, trying to raise $ 10- $ 15 billion as political tensions ease and market conditions return, said one of the people.
The decision to postpone the deal, which was originally set for late August, was taken at a board meeting before Alibaba's last earnings release last week, the other person said.
The delay is due to the lack of economic and political stability in Hong Kong in the midst of more than 11 weeks of demonstrations that have become increasingly violent and threw the city into turmoil, the people added.
Tear gas has been used frequently by police while more than 700 people have been arrested, followed by an unprecedented airport stop last week. Hong Kong's stock market fell to a seven-month low last week.
"It would be very unwise to start the deal now or anytime soon," said the first person. "It will certainly annoy Beijing by offering Hong Kong such a great gift given what's happening in the city," the source added.
Both people declined to be identified because they did not have permission to speak to the media.
Alibaba declined to comment on its Hong Kong agreement plans.
DEAL CRUCIAL FOR HK EXCHANGE
The deal, which was possibly the world's largest stock deal of the year and the largest sale of shares in seven years, would have given Alibaba a war chest to continue investing in technology.
However, the company sees it as a way to "diversify access to capital markets", but not as a core for the business, the other source said. Alibaba "does not see the postponement as a blow," the person added.
Meanwhile, a listing of Alibaba is a big deal for the Hong Kong Stock Exchange, which hangs behind the New York rivals in the annual fight to be the leading worldwide listing arena.
Just last month, Anheuser-Busch InBev canceled a planned up to $ 9.8 billion Hong Kong stock exchange listing of its Asia Pacific unit.
The city loosened its rules last year specifically to entice overseas Chinese tech giants to list closer to home.
Alibaba would be the first to test the new system.
On request last week whether Hong Kong's unrest would affect Alibaba's listing, Hong Kong Stock Exchange CEO Charles Li failed to directly recognize the company's application, which is still technically confidential.
But Li added: "I'm sure companies like it will eventually find a home here because this is home and I think they will come. However, I don't know when."
Julie's Report Zhu and Greg Roumeliotis; Editing Himani Sarkar