Alibaba, JD.com Awaken China Tech’s Long-Dormant IPO Machine – Yahoo Finance

(Bloomberg) — Alibaba Group Holding Ltd. and JD.com Inc. have begun preparations for a trio of the year’s biggest Chinese debuts, heralding a wave of initial public offerings that promise to breathe new life into the struggling technology industry and Hong Kong’s stock market.
Most Read from Bloomberg
UBS May Cut Workforce by 20-30% After CS Takeover
OPEC+ Makes Surprise 1 Million-Barrel Oil Production Cut
Dubai’s Latest Boom Is Pricing Out the Expats It Once Coveted
Trump Weighs Bid to Shift NY Criminal Case to Staten Island
Veteran Money Managers Bail on Stock Rally With Fed Hawks Flying
Cainiao Network Technology Co., Alibaba’s logistics arm, has kicked off discussions with banks for what may become the first of several IPOs by units of the e-commerce giant. On Thursday, two JD subsidiaries filed for first-time share sales in the city. Those three listings could raise about $5 billion between them, people familiar with the matter said.
The moves ignited hopes that Beijing — keen to resuscitate the world’s second-largest economy — is unfettering the private sector, allowing its biggest names to again pursue business and fundraising. Alibaba got the ball rolling this week by unveiling a six-way split that could usher several businesses — including Cainiao — onto public markets. That shake-up accomplishes Beijing’s broader aim of carving up tech titans and diminishing their influence over swaths of the economy — while unlocking potentially billions of dollars in value.
The revival of the Chinese tech IPO train ends a year-long drought that set in after regulators pulled the plug on Ant Group Co.’s record IPO. Once among the world’s most lucrative investment banking plays, the business dried up around 2021 when Beijing launched a blistering attack on internet sectors from online commerce to gaming, and tightened requirements for overseas listings.
“For the big techs, spinoffs no doubt can boost shareholder return, unlock the company value and ease regulatory concerns related to anti-trust,” said Willer Chen, senior analyst at Forsyth Barr Asia Ltd. “For more than a year or so, there has been very light demand on the deal side as market conditions were weak and investors disheartened. Now, the environment seems more friendly for valuation, which make sense for big tech subsidiaries that have a mature business and strong cash need to consider IPOs.”
A number of Chinese tech names have lodged or resubmitted their Hong Kong listing applications in just the past week: Lalatech Holdings Ltd., another tech-driven logistics giant in China, social media app Soulgate Inc. and fitness app Keep Inc. But there are bigger candidates: TikTok-owner ByteDance Ltd., ride-hailing giant Didi Global Inc. and social media player Xiaohongshu are potentially waiting in the wings.
Read more: China Kicks Off 2023 Leading Global Peers in Equity Fundraising
Alibaba’s announcement dovetailed with the return of its billionaire co-founder Jack Ma to China, as well as a series of official proclamations of support for the private sector. But many entrepreneurs and tech executives, traumatized by almost two years of relentless scrutiny, remain wary of Beijing’s intentions given the Xi Jinping administration’s distrust of powerful private firms. And there’s no guarantee that splitting up and spinning off actually propels businesses over the long haul.
But Alibaba and JD are adding fuel to a trend that’s emerged this year. Chinese firms have beaten their US and European peers early in the year on equity financing, buoyed by hopes about China’s post-Covid reopening while the rest of the world grapples with a potential recession.
It “indicates Beijing support for more buoyant capital market activities within China’s tech sector ahead,” said Bloomberg Intelligence analyst Catherine Lim. “This should help lift overall market sentiment and anticipation for the listing of other mammoth companies within the sector.”
Tapping the IPO market is key for Chinese firms to bankroll expansion and expand their investor base. A wave of listings will also benefit Hong Kong, long the prime venue for Chinese debuts until Beijing clamped down. The city has only seen about $852 million raised through IPOs so far this year, a fraction of the $4.1 billion raised in the same period in 2022.
Cainiao, which means amateur or rookie in Chinese, is on track to hit the market first in part because it’s had a long track-record as a standalone operation that supports other parts of the Alibaba empire. While loss-making, the unit has consistently racked up double-digit revenue growth and is one of the company’s most recognizable brands, a nationwide logistics giant that helps ship upwards of a billion packages during the company’s signature Singles’ Day shopping festival.
In the longer term, Alibaba’s burgeoning cloud business is attracting outsized anticipation. Group Chief Executive Officer Daniel Zhang will personally take the helm, underscoring hopes that artificial intelligence will lay the foundation for future growth. That unit houses its Slack-like DingTalk app and provides cloud computing and data-processing services worldwide. Much like Amazon Web Services, it grew out of the need for massive computing power to support e-commerce, and now is a leading regional player in the business of providing cloud and data services to corporate clients.
For JD, it had in past years spun off divisions including JD Health International Inc., which raised almost $4 billion in a 2020 Hong Kong IPO. JD Technology, its fintech arm, may be looking to list in the Asian financial hub.
There’s been speculation also about Tencent Holdings Ltd. potentially taking a page out of Alibaba’s book.
It runs China’s biggest mobile wallet and payments platform, alongside four main businesses with spinoff potential: gaming, cloud computing, WeChat and online content such as video. The company has already listed music and online literature.
“There are positive implications for the sector as investors get reminded that the Chinese Internet platforms are significantly undervalued, and these companies will continue to try to narrow the gap,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “It also shows that the regulatory environment is supportive.”
–With assistance from Lin Zhu.
Most Read from Bloomberg Businessweek
John Wick’s Blowout Opening Lifts Lions Gate, But It Won’t Fix Starz
Dungeons & Dragons’ Epic Quest to Finally Make Money
The Texas Preacher’s $24 Million Ponzi Scheme
The Triumph of UBS Is Also the Humbling of Swiss Banking
Trump Indictment Is Going to Make US Politics Even More Divisive
©2023 Bloomberg L.P.
Related Quotes
The sharpest rally for U.S. government debt in years has left investors and analysts warning that bond markets are vulnerable to a reversal.
Sen. John Fetterman was discharged on Friday from Walter Reed National Military Medical Center, where he checked himself in for depression, his office said. The 53-years-old Democrat from Pennsylvania entered the hospital in mid-February after struggling with what an aide said was clinical depression that left him unable to take care of himself in basic ways, like eating or drinking. To understand what was being said, Mr. Fetterman had to rely mostly on a tablet to transcribe what people were saying.
JD.com, Inc. (JD) closed the most recent trading day at $43.89, moving -1.15% from the previous trading session.
SmartAsset compares three of the largest investment companies based on usability, trade experience, offerings and cost. Learn more here.
Bob Michele, the chief investment officer of JPMorgan Asset Management, has warned of an economic downturn, saying that markets are headed for a rally before an inevitable slowdown. In an interview with Bloomberg on Friday, Michele says risk assets will rise in the next quarter as they did during the Great Recession. "In the next quarter, we could see risk assets rally. You could have a feel-good period, and then the reality catches up," Michele said. "If we've been taught anything this month, y
Treasuries aren't the only refuge in a slowdown. Dividend names also "can provide a margin of safety," says UBS.
When Credit Suisse opened its first office in Saudi Arabia in early 2021, Bruno Daher, the cigar-smoking head of Credit Suisse’s Middle East business, declared it a “key growth market”.
Bank stocks have been beaten down so much this year that they're now starting to look attractive.
Recognizing the right stocks is a skill that every investor needs to learn, and the sheer volume of market data, on the main indexes, on individual stocks, on and from stock analysts, can present an intimidating barrier. Fortunately, there are tools to help. The Smart Score is a data collection and collation tool from TipRanks, using an AI-powered algorithm to sort the data on every stock according to a series of factors, 8 in all, that are known for their strong correlation with future share ou
Insiders at Peapack-Gladstone and Bankwell Financial scooped up shares in March as the banking sector tanked after SVB’s collapse.
You can use time as a huge ally when planning your investments to build wealth in the long run.
(Bloomberg) — Charles Schwab Corp.’s worst month in more than 35 years has sparked a debate among analysts as to whether the brokerage giant has been unfairly punished by investors amid growing fears about the US banking sector.Most Read from BloombergUBS May Cut Workforce by 20-30% After CS TakeoverOPEC+ Makes Surprise 1 Million-Barrel Oil Production CutDubai’s Latest Boom Is Pricing Out the Expats It Once CovetedTrump Weighs Bid to Shift NY Criminal Case to Staten IslandVeteran Money Managers
Before she started cash stuffing, Jasmine Taylor said she was tired of being in financial distress. She turned that success into 'Baddies and Budgets'
Regardless of what stage of the market cycle we're in, some folks never tire of searching for cheap stocks to buy. If it has thin trading volume, the fund manager will have an awfully tough time accumulating shares — without making a big impact on the stock price. IBD research also finds that dozens, if not hundreds, of great stocks each year do not start out as penny shares.
The company delivered around 36% more vehicles to customers in the first quarter than it did a year earlier.
March deliveries from the three Chinese EV makers fell within the companies' guided ranges. Combined deliveries were up month over month and year over year.
(Bloomberg) — Just when it seemed like things were getting back to normal at Rhett Ricart’s Columbus, Ohio, car dealerships — after pandemic-induced inventory shortages and runaway price inflation — a new obstacle emerged to keep buyers from closing the deal: soaring interest rates on auto loans.Most Read from BloombergUBS May Cut Workforce by 20-30% After CS TakeoverOPEC+ Makes Surprise 1 Million-Barrel Oil Production CutDubai’s Latest Boom Is Pricing Out the Expats It Once CovetedTrump Weighs
The sum of $10 million might sound like a lot – and to the average person, it is. But what if you want to retire at just 30 years old and potentially live another 40, 50 or even 60 years … Continue reading → The post Is $10 million Enough to Retire at 30? appeared first on SmartAsset Blog.
(Bloomberg) — Optimism about imminent rate cuts is stirring animal spirits — and unease — in equal measure at the end of a turbulent quarter in markets. Most Read from BloombergUBS May Cut Workforce by 20-30% After CS TakeoverOPEC+ Makes Surprise 1 Million-Barrel Oil Production CutDubai’s Latest Boom Is Pricing Out the Expats It Once CovetedTrump Weighs Bid to Shift NY Criminal Case to Staten IslandVeteran Money Managers Bail on Stock Rally With Fed Hawks FlyingProminent money managers have sto
The Charles Schwab Corporation (SCHW) closed the most recent trading day at $52.38, moving -0.17% from the previous trading session.

source

Leave a Comment

Your email address will not be published. Required fields are marked *