Alibaba, the Chinese conglomerate, has finally made its debut on the Chinese public market through Hong Kong. Although successful at making a brilliant return to the Asian market, the move is politically motivated rather than just another business move.
Hong Kong shares made a solid debut on Tuesday, popping at 7%. Shares were last trading at 188 Hong Kong dollars ($24.02), higher than the 176 Hong Kong dollars ($22.50) they were priced at. At this rate, the Chinese e-commerce company is touted to be able to raise $12.9 billion, which will also be the largest public offering so far this year.
“We have come home,” Alibaba said Tuesday morning on its official account on Weibo, the Chinese equivalent of Twitter.
“Five years ago, we said, if conditions permit, we will for sure return,” said Daniel Zhang, chairman, and chief executive officer of Alibaba Group, at Tuesday’s listing ceremony.
Thanks to “capital market reform,” Zhang said, “we can make up for the regret five years ago when we missed Hong Kong.”
Notably, Alibaba first decided to make its initial public offering in New York in 2014, which raised $25 billion and shattered records as the largest in history. Hong Kong was Alibaba’s initial choice but they eventually decided to forego the move because of a disagreement over Alibaba’s shareholding structure.
Alibaba finally pushing through with selling some of its shares to the Hong Kong public market is a move that is expected to please China in relation to the months-long tension between the semi-autonomous country and the Communist government.
Hong Kong is the Asian financial hub and establishing a strong Chinese-led company in its ranks is a strong symbolic presence in contradictory to Hong Kong’s consistent refusal to China’s demand for unification.
Relatively, Alibaba doesn’t really need the cash gained from the listing. The company is profitable, and it already has roughly $33 billion in cash reserves. Although the up to $13 billion could be used to expand its business.
Now, Alibaba has praised Hong Kong when it said it would begin selling shares to retail investors.
“During this time of ongoing change, we continue to believe that the future of Hong Kong remains bright,” Alibaba chairman and CEO Daniel Zhang wrote in a letter to investors. “We hope we can contribute, in our small way, and participate in the future of Hong Kong.”
China moved quickly to praise Alibaba’s return. The Securities Times, a newspaper run by the Communist Party’s People’s Daily called the listing a “win-win move.”
“This truly indicates the love among family members and that blood is thicker than water,” the newspaper wrote.