Alibaba Group, the China-based e-commerce behemoth, managed to raise around $12.9 Billion with its landmark listing that happened in the city of Hong Kong. This was the largest of its kind share sale that happened in this city after a period of 9 years. This was also a world record for the sale of secondary shares across the border.
This particular deal has been noted to be a significant boost to the city of Hong Kong after almost 5 months of dealing with the anti-government protests. This share sale also came as a boon for the city, given the fact that it has been experiencing a recent slide into recession after more than a decade.
In its statement, Alibaba mentioned that it had pitched the price for its shares at $22.49 or HK$176, each with a discount close to 2.9 percent for its closing price in New York, which confirms the information previously provided by Reuters. At this price, it confirms the fact that Alibaba will successfully raise a minimum of $11.3 Billion, which is HK$88 Billion. This is symbolic for the company as the number “8” in the Chinese culture is connected with good fortune and prosperity.
Apart from that, Alibaba also picked the number for its stock code as 9988. This combines two among the luckiest of numbers together from the Chinese culture that symbolizes prosperity that lasts long. The total amount raised from this deal might eventually reach the mark of $12.9 Billion, but only if the “Greenshoe” option for over-allotment was exercised.
On Tuesday, Alibaba’s shares for New York closed at $185.25. One from the Alibaba’s ADS (American Depositary Shares) listed in New York is worth 8 of the shares in Hong Kong. While the overall discount to the last close by Alibaba was set for 2.9 percent, the price actually represented a total of 3.7 percent discount for the share price obtained by Alibaba on 12th November, which was the day prior to the launch of the deal.
Sumeet Sing, the research head at Aequitas, who also publishes on the research website named SmartKarma, mentioned that the discount percent was expected to be ranged between 4 and 5 percent, so the 3.7 percent final discount is just about right in this scenario. This deal by Alibaba comes in the midst of a year-end rush for sales of the shares. This is especially true with Aramco, the Oil Giant based in Saudi Arabia, in the scenario that it might threaten the record set by Alibaba in the year 2014.