Does Alibaba registering 1 billion American shares mean major shareholder SoftBank is heading for the exit?
-- Alibaba filed to register 1 billion new American depositary shares to make room for shares to be deposited by unnamed existing holders
-- Stock slumped 4.5 per cent as analysts speculated SoftBank may be planning to sell its stake
Cheryl Heng
South China Morning Post
Published: 8:00pm, 7 Feb, 2022
Alibaba Group Holding slumped in Hong Kong by the most in four trading days after the e-commerce group filed to register more American depositary shares (ADS) in the coming days, stoking speculation that some insiders are preparing to sell their stakes.
The Hangzhou-based company plans to register an additional 1 billion new ADSs, according to its 6F filing in New York on February 4. The move is to prepare for the deposit of ordinary shares, including by current holders who have indicated their intent to do so in the future, Alibaba said.
While this issuance does not dilute investors’ stakes or raise additional capital, it created additional uncertainty in a stock whose slump over 12 months to an all-time low has already unnerved investors and wrong-footed analysts. Citigroup said in a February 6 report that SoftBank Group may be planning to cut its stake in the company.
“What we can analyse about the situation is similar to Citi’s, but at the moment it is just a guess,” said Zhang Jun, head of research and portfolio manager of China Asset Management (HK). SoftBank, one of the earliest and biggest financial backers of Alibaba, has also previously sold the company’s shares but that has not [required] new registration of ADSs, he added.
Alibaba’s issued capital comprised 21.7 billion ordinary shares, translating into the equivalent of 2.72 billion ADSs, according to its most recent financial report. The new ADSs would amount to more than one-third of the existing base. One ADS represents eight ordinary shares.
SoftBank has a long-term “Master ADS Agreement” from September 2014 to deposit its shares into so-called structural safekeeping accounts (SSA) and sell them in the form of ADS. SoftBank held 5.39 billion ordinary shares, or about a quarter of Alibaba’s issued capital, according to its November 2019 IPO prospectus.
Other key shareholders of Alibaba are co-founder Jack Ma, with a 6 per cent stake, and directors and executive officers with a combined 9 per cent stake. Alibaba is the owner of South China Morning Post.
SoftBank and Alibaba did not immediately reply to emails seeking comment on the February 4 filing.
Does Alibaba registering 1 billion American shares mean major shareholder SoftBank is heading for the exit? | South China Morning Post (scmp.com) |
