Alibaba Listing

 In Business

Chinese Internet Goliath Alibaba on Wednesday set the listing price of their secondary offering at a price of 176 Hong Kong Dollars ($22.50), which is expected to raise at least $11 Billion. The listing has been a rare glimmer of hope for the city which has been overrun by political turmoil and protests over the past few months. Shares are due to start trading on the exchange on November 26th, but are currently priced at a 2.9% discount to their shares traded in the United States. The offering is somewhat surprising given the fact that Alibaba currently has over $30 Billion in cash on the balance sheet, but now maybe a perfect time has given global macro conditions. According to analysts, Alibaba is using the momentum from recent momentum the company has been experiencing from strong earnings growth to a record-breaking Single’s Day, where the company sold over $38.4 Billion worth of goods. The company announced that proceeds from the sale would be used for strategies to expand its user base and enhance “digital transformation, and continue to innovate and invest for the long term” This will be the first major test for Chief Executive Officer Daniel Zhang, who took over after the retirement of founder Jack Ma. He will be tasked with proving to shareholder’s he can effectively manage and produce returns on a $50 billion war chest. Chinese E-commerce is expected to grow at a 17% CAGR over the next three years as internet penetration continues in mainland China. I believe that much of the funds that the company has at its disposal will be used on further investing in new technologies in China such as food delivery and cloud computing investments.

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