Alibaba may choose New York over Hong Kong for its hotly anticipated IPO

March 7, 2013
March 7, 2013

Will Hong Kong lose out on a hotly anticipated jumbo Chinese IPO?

According to the territory’s South China Morning Post, China’s largest e-commerce company, Alibaba Group, is discussing Nasdaq (paywall) as the venue for its long-awaited listing. An IPO could value Alibaba at more than $40 billion, making it potentially the biggest tech IPO in history. If the company chooses a US listing, that would be a further blow to the Chinese territory, where the value of IPOs on the stock exchange plummeted to a four year low last year as mainland China’s economic slowdown made investors less interested in allocating cash there.

Chinese internet firms have a long record of choosing the Nasdaq over Hong Kong, mainly because they tend to be fast-growing but also young and loss-making.  The Hong Kong stock exchange requires companies conducting IPOs to have earned a profit for three years before going public.

But Alibaba is profitable (its part-owner Yahoo discloses its finances).  So it would not be forced to choose a US exchange over Hong Kong in the way that Chinese social networking business Renren, for example, had to. However, it would be not be unusual if Alibaba were meeting with banks and stock exchange representatives in Hong Kong and New York to see where it would get the best valuation for its shares.

Investment bankers in both cities have been crowding around the company and trying to get hired on the IPO. It was reported (paywall) last month that Alibaba executives were set to meet potential advisers to discuss a Hong Kong listing.

Alibaba Group includes Alibaba.com, an online marketplace connecting Chinese manufacturers with overseas buyers, and auction site Taobao. Alibaba.com was previously listed on the Hong Kong exchange. It was taken private by Alibaba Group founder Jack Ma last year in a move widely viewed as a precursor to an IPO of his entire business.

An Alibaba Group spokesman declined to comment.

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