After months of uncertainty over the highly-anticipated listing of Chinese e-commerce business Alibaba Group, the Jack Ma-led company has decided to take its initial public offering to the US, according to a statement from the firm.
“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,” the statement said.
Alibaba, backed by CIC International, Boyu Capital and CITIC Capital, as well as CDB Capital, the equity investment arm of China Development Bank, Silver Lake and Temasek, is China’s largest e-commerce business and was hoping to list in Hong Kong.
However, Hong Kong denied its request to retain a partnership structure, where management would control the board despite holding a minority of shares in the company – something not allowed in Hong Kong-listed companies.
Markets have closely watched Alibaba’s discussions with the Hong Kong Stock Exchange over recent months as to whether or not they could offer some exemptions to the rule.
The decision could be detrimental to Hong Kong, which is often pegged as the key listing destination in Asia.
“We wish to thank those in Hong Kong who have supported Alibaba Group. 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,” the Alibaba statement continued.
“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.”
Subsequently, after countless media requests to the Hong Kong Exchanges and Clearing for comment, HKEx chief executive Charles Li admitted the decision hinders Hong Kong’s competitiveness as a listing destination.
“We respect the company’s decision and wish it well. We are proud of our tradition of respect for the rule of law and adherence to principles. However, we also need to find ways to make our market more responsive and competitive, particularly with respect to new economy or technology companies,” he said in a statement.
“We have to consider possible changes where they might be necessary, with everything according to our due process. The listing committee's work on shareholding structures didn’t start because of Alibaba and will not end now because of Alibaba. We need to ensure our markets continue to be relevant in the new era of economic development.”
As discussions were on-going in November, Mary Ma, co-founder and chairman of Chinese private equity firm and Alibaba stakeholder Boyu, stepped down from her post at the Hong Kong Stock Exchange where she served on the main board and listing committees, according to an earlier statement from the HKEx.
However, it is unclear whether the move was linked to the potential Alibaba IPO in Hong Kong. Ma was simultaneously appointed as non-executive chairman at the Hong Kong Securities and Futures Commission, according to an SFC statement, replacing out-going non-executive director Hon Chan Kam-lam after six years of service.
Alibaba and selling shareholders now intend to register the proposed offering in the US. The IPO is expected to reach around $15 billion, according to media reports.