Chinese e-commerce giant Alibaba is considering an American IPO, after negotiations with the Hong Kong stock exchange failed. This might lead to a huge clash of America’s two largest stock exchanges, the NYSE Euronext and the Nasdaq.
Traditionally on the Nasdaq
Traditionally, technology companies used to go for the Nasdaq, but Facebook’s less than smooth IPO seems to have damaged Nasdaq’s reputation. Twitter, for example, is leaning towards the New York Stock Exchange, when it starts trading in the near future. NYSE will do everything within its power to attract a giant like Alibaba, possibly luring it away from under Nasdaq’s nose.
Alibaba’s worth is an estimated 120 billion dollars (some 90 billion euro), with a Chinese market share of 80 % when it comes down to e-commerce. Those numbers give Alibaba third place in the hierarchy of world’s largest internet companies, only behind Amazon and Google.
Law prohibits Alibaba from joining Hong Kong stock exchange
Alibaba heading towards the United States is a huge blow for the Hong Kong stock exchange. The reason for the failed negotiations lies in the stock structure of the company. Alibaba uses dual-class shares, popular with online companies like Google and Facebook. Hong Kong however does not allow this type of structure.
Alibaba has closed a week’s long negotiation with Hong Kong and the regulators by announcing the possible step towards the US. "We have come to the end of dialogue with Hong Kong and we are pivoting to the US to start the listing process”, an inside source confirmed to Reuters. Supposedly, several American law firms have already been contacted in order to follow up on a possible IPO.