Today, Tuesday, November 26, Alibaba Group debuted on the Hong Kong stock exchange, becoming the first Chinese company to be publicly listed in both Hong Kong and the United States. The offering raised around $11 billion, while shares rose 6.3% on the opening day of trading to $23.89 from an issuance price of $22.49. The IPO was the largest on the HKEX in the last 10 years.
Alibaba’s Hong Kong IPO is a huge vote of confidence for an exchange that has been losing significant listings to the US in recent times. Alibaba’s presence in the city will boost its prestige among what has been a turbulent year for the special administrative region. The new listing will allow Chinese investors to easily trade Alibaba shares, while global investors will have 24 hour access due to the dual listing in Hong Kong and the US.
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Following iconic founder Jack Ma’s transition to an advisory role, Chairman and CEO Daniel Zhang addressed attendees at the gong ringing at HKEX. He spoke of a homecoming for the Asia’s largest company, “Thank you Hong Kong and thank you HKEX. Your reform and innovation of the capital markets in the past few years has made it possible for us to realize what we missed five years ago.” He continued, “We came home. We came back to list in Hong Kong.” His remarks were received with thunderous applause from those in attendance at the HKEX.
In the company’s IPO prospectus, Alibaba said it would use the capital raised to increase its investment in online delivery and local services platform Ele.me and in online travel group Fliggy, while also enhancing their online video entertainment platform Youku. The capital influx from the Hong Kong offering will help Ele.me compete with Meituan Dianping in the local services and delivery sector, which remains very capital intensive. Rival Meituan-Dianping recently became the third-largest internet company in China, behind Alibaba and Tencent following the decline of Pinduoduo’s market value after the release of third quarter results.