The Strategist

Alibaba's shareholders approve stock split

07/16/2019 - 11:32

Shareholders of Alibaba approved a stock split, which, according to the Chinese e-commerce giant, can help in further raising funds, reports CNBC.

hinglish Notes via flickr
hinglish Notes via flickr
The stock split, which is expected to take place before July 15, 2020, is proposed to be held in the ratio of 1 to 8. This means that the current number of ordinary stocks, which is 4 billion, will increase to 32 billion. The voting took place at the annual general meeting of Alibaba shareholders.

In the stock split offer that was issued last month, Alibaba said it would split the number of papers at a lower price, but, importantly, also "increase the company's flexibility in raising capital, including issuing new shares."

The Chinese company is expected to place shares on the Hong Kong Stock Exchange in the second half of 2019.

According to Bloomberg, the company is already working on the planned placement with financial advisors. Alibaba's share placement in Hong Kong could reach $ 20 billion.

Alibaba’s papers are already traded on the New York Stock Exchange, where the e-commerce giant held an IPO in 2014, managing to raise $ 25 billion.

Placement of Alibaba’s stocks on the Hong Kong Stock Exchange became possible after the site’s management allowed the placement of dual-class shares in 2018.

It is likely that one of the reasons that prompted the company to plan a secondary listing in Hong Kong was the trade war between the United States and China.

There are several reasons why companies are splitting stocks. One of them is desire to increase the number of shares in the hope of attracting new investors. Another is the desire to reduce the cost of each share, if the company believes that the price has become too high. When Alibaba listed in the United States in 2014, it valued its shares at $ 68 per share. On Monday, the company's shares ended trading at a level above $ 173.