Alibaba to apply for primary listing in Hong Kong

Alibaba will apply for a primary listing in Hong Kong and keep its US listing, the first big company to take advantage of a rule change allowing high-tech Chinese firms with dual-class shares to seek dual primary listings in Hong Kong.

Shares in Alibaba rose 4 percent in Hong Kong upon market opening in response to the news.

Already present on the Hong Kong bourse with a secondary listing since 2019, Alibaba said it expects the primary listing to be completed by the end of 2022. Chief Executive Daniel Zhang said the dual listing would foster a “wider and more diversified investor base.”

Seeking a dual primary listing will also allow Alibaba to apply for the Stock Connect scheme that will permit Chinese mainland investors to buy the company’s shares more easily.

The move comes after the Hong Kong Stock Exchange in January changed its rules to allow innovative Chinese companies with weighted voting rights or variable interest entities (VIE) to carry out dual primary listings in the city.

Under a VIE structure, a Chinese company sets up an offshore entity for overseas listing purposes that allows foreign investors to buy into the stock.

“Hong Kong is also the launchpad for Alibaba’s globalization strategy, and we are fully confident in China’s economy and future,” Alibaba CEO Zhang said in a statement.

Alibaba listed on the New York Stock Exchange in September 2014, marking what was at the time the largest IPO in history.

In order to switch to a dual primary listing, the HKEX said companies had to have a good track record of at least two full financial years listed overseas, and a capitalization of at least HK$40 billion (US$5.10 billion) or a market value of at least HK$10 billion plus revenue of at least HK$1 billion for the most recent financial year.