The second listing will give Alibaba the war chest it needs to keep investing in technology as growth in China flags and the world’s No.2 economy pushes to strengthen its tech industry amid an escalating trade spat with the United States.

File Photo: A logo of Alibaba Group is seen at an exhibition during the World Intelligence Congress in Tianjin, China May 16, 2019.
File Photo: A logo of Alibaba Group is seen at an exhibition during the World Intelligence Congress in Tianjin, China May 16, 2019. (Jason Lee / Reuters)

Alibaba Group is considering raising as much as $20 billion through a second listing and has picked Hong Kong as the venue, three sources told Reuters, in another blockbuster deal after its record $25 billion public floats in New York in 2014.

The deal, which would be the sixth-biggest follow-on share sale ever, would give Alibaba a war chest to keep investing in technology - a priority for China as growth flags and as the world's second-largest economy faces an escalating trade spat with the United States.

The e-commerce giant is working with financial advisers on the offering and is aiming to file an application in Hong Kong as early as the second half of 2019, said the sources, who are familiar with the matter but did not want to be named as the plans are not public yet.

They cautioned that many details were not clear, including the planned size. One person with direct knowledge said it was more likely to be between $10 billion and $15 billion.

At $20 billion, Alibaba's deal would rank behind NTT's 1987 $36.8 billion sale, crisis-era offerings of $24.4 billion and $22.5 billion from the Royal Bank of Scotland and Lloyds Banking Group, as well as the $20.7 billion raised by US insurer AIG in 2012, Refinitiv data shows.

A spokesman from Alibaba declined to comment.

Since its US listing, Alibaba has nearly doubled in size to become the largest-listed Chinese company with a market value of more than $400 billion.

Hong Kong, Alibaba’s initial preference for its IPO, had refused to accept its governance structure, where a self-selecting group of senior managers control the majority of board appointments.

Early last year, when Hong Kong was preparing to allow dual-class share listings, Alibaba founder Jack Ma had said that the company would “seriously consider” a listing on its exchange.

Bloomberg had first reported the planned second listing.

Bottleneck for sales

A Hong Kong listing would give mainland investors their first direct access to one of China's biggest success stories, via the stock connect trading link between Hong Kong, Shanghai and Shenzhen.

It would also give the company an extra pocket of liquidity and potentially a better valuation if the household name became a favourite among retail investors in Hong Kong.

Alibaba's revenue growth has been slowing compared to its peak in early 2017 as China's e-commerce industry matures.

Analysts argue that the company has begun to exhaust its potential user base of e-commerce customers in top Chinese cities, which creates a bottleneck for sales.

In recent years, it has expanded into new sectors including cloud computing division and Hema, its chain of brick-and-mortar supermarkets - both of which need high upfront investment.

Source: Reuters