Alibaba Group Holding Ltd.’s founder Jack Ma will consider listing the company in Hong Kong and hopefully raise its investment, suggesting a potential advantage for the city, following its decision to allow dual-class share listings.
Ma made the statement in response to Hong Kong chief executive Carrie Lam’s invitation to come back to list in the city during an event in Hong Kong.
The Alibaba CEO said that Lam’s invitation marks a strong commitment, so they will certainly and seriously think about a stock listing in the city’s market. He added that they hope to further invest in Hong Kong and increase their involvement in the city’s economy.
Shares of Alibaba fell 0.02 percent to $190.30 during after-hour trade.
Hong Kong to Allow Dual-Class Share System
Lam’s request came after Hong Kong has opened its doors to companies offering various classes of shares with different voting power to list in the city.
The dual-class system has been banned in Hong Kong since the mid-1980s, but has acquired momentum last year after Lam was appointed as Hong Kong’s chief executive.
Hong Kong’s stock exchange has also proposed to let innovative companies list in the market with dual-class share structures to avoid missing an opportunity on more initial public offering (IPO) by distinguished businesses, like Alibaba.
Three years ago, the Hangzhou-based retailer’s IPO made a record of over $25 billion in New York, marking as the biggest IPO in US history.
This was after Hong Kong turned down its plan to adopt a governance framework, which could have allowed a self-selecting group of senior managers to be in charge of most of the board appointments.
Alibaba’s decision to hold its $25 billion initial share sale in New York has led bankers, brokers, exchange official, investors, and officials to consider lifting a longstanding ban on stocks with dual voting structures.
With Hong Kong set to allow dual-class shares, Lam hoped that the e-commerce conglomerate can now return to list in the city, adding that the move would attract more industries to list in Hong Kong.
Ma stated that the passing of the dual-class share system will make significant changes and will help Hong Kong greatly in its future reforms, adding that he has never been as confident in the city as today.
Hong Kong’s exchange operator has started on outlining particular rule changes that will be presented for an official public discussion in the first three months of 2018.
Under the planned term revisions, innovative Chinese businesses with a minimum market capitalization of about HK$10 billion ($1.3 billion), along with a primary listing on the New York Stock Exchange, NASDAQ, or London Stock Exchange would be allowed to have a second listing in Hong Kong.
Bankers believed that Hong Kong trading volumes for a widely recognized industry, such as Alibaba would eventually grow to a great extent.
In the event that more than 55 percent of a secondary listing occurs in Hong Kong over a year, the city’s exchange plans on upgrading the company’s listing to deem it as a dual-listing with its other primary exchange.
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