Alibaba to float in US, not Hong Kong

Out-Law News | 18 Mar 2014 | 10:07 am | 1 min. read

China's largest e-commerce company, Alibaba Group, has announced it plans to float on the US stock exchange, after abandoning attempts for a flotation on the Hong Kong stock market.

Alibaba has confirmed that it will pursue an initial public offering (IPO) in the US, in what is expected to be one of the world's largest ever IPOs.

The company, which the BBC describes as the world's largest online retailer, is believed to be seeking to raise $15 billion with the listing, which the BBC said is likely to take place in the second half of this year.

A statement released by Alibaba said: "Alibaba Group has decided to commence the process of an initial public offering in the United States. This will make us a more global company and enhance the company’s transparency, as well as allow the company to continue to pursue our long-term vision and ideals."

Alibaba had initially explored issuing an IPO in Hong Kong, however it abandoned the plans last year after failing to reach an agreement with the Hong Kong listing authorities about the appointment of board members after flotation. According to the Financial Times Alibaba wanted to control the make-up of its board, allowing a group of senior managers to nominate a majority of its board directors. This arrangement was seen as having the same effect as a dual-class share structure, undermining Hong Kong's principle of one-share, one-vote. Dual-class share structures, which give more voting power to a minority group of owners, are banned under Hong Kong listing rules.

Speculation arose that Hong Kong and Alibaba might reach an accommodation after Charles Li, the head of the Hong Kong stock exchange called for a market consultation on alternative shareholder rights last October. Li, who is the chief executive of Hong Kong Exchanges and Clearing, said: “Losing one or two listing candidates is not a big deal for Hong Kong; but losing a generation of companies from China’s new economy is. And losing it without a proper debate is even more unacceptable,” the Financial Times reported.   

However Alibaba's announcement that it is to list in the US confirmed recent rumors of a transatlantic switch.

Announcing its plans to list in the US, Alibaba said: "We respect the viewpoints and policies of Hong Kong and will continue to pay close attention to and support the process of innovation and development of Hong Kong. Should circumstances permit in the future, we will be constructive toward extending our public status in the China capital market in order to share our growth with the people of China."

In a statement from the Hong Kong stock exchange, Li said: "We respect the company's decision and wish it well." In what the BBC described as an apparent reference to Alibaba's insistence on maintaining its management structure he said: "We are proud of our tradition of respect for the rule of law and adherence to principles."