Alibaba rules out changing partnership structure to gain Hong Kong listing

Mainland e-commerce giant says it will not revamp in order to meet HK listing regulations while defending plunge into fund management

PUBLISHED : Thursday, 13 March, 2014, 1:25am
UPDATED : Thursday, 13 March, 2014, 5:58pm

Alibaba will not change its partnership structure in order to list on the Hong Kong stock exchange, executive vice-chairman Joe Tsai said yesterday.

"The one thing I can't understand is people think we're going to change our partnership structure just to accommodate a listing in Hong Kong. That's never going to happen," said Tsai, who also defended the company's move into fund management on the mainland.

"Hong Kong is a place where people take the one share, one vote principle very seriously," he said. "That's how they feel is the one thing that maintains the integrity of the market - I respect that."

Tsai's comments were the strongest defence so far by Alibaba of its partnership structure, putting the ball in Hong Kong's court to change its listing rules soon or risk losing what is potentially the biggest-ever initial public offering by an internet company, surpassing social media giant Facebook's US$16 billion listing in 2012.

The insistence on maintaining the existing shareholding structure keeps the doors open for a listing overseas, with New York and London having been raised as potential locations, although Tsai wrote in a blog post last year that Hong Kong was the "natural" first choice for Alibaba's listing.

The mainland e-commerce titan has been at odds with Hong Kong regulators, which last year rejected Alibaba's plans for a listing in the city with a shareholder structure that allowed a group of top managers and founders to nominate and control the board, while holding only about 13 per cent of the company's shares.

Hong Kong Exchanges and Clearing and the Securities and Futures Commission have been discussing since potential changes to listing rules to allow for "weighted voting rights".

Tsai also addressed criticism that Alibaba's entry into the fund management industry had come at the expense of big state-owned banks and placed its customers at risk. "I don't think we need to respond to these claims about 'vampires'," he said, referring to remarks made on mainland television last month.

"Sucking money out of the large banks and giving the benefits to the people, if that's what vampires do, we're happy to be vampires, all the time," he said.

Alibaba launched an online mutual funds platform with its Yu E Bao product in June last year, allowing customers to buy and sell a single money market fund. By January, the fund, managed by Tianhong Asset Management, reported assets of 250 billion yuan (HK$316 billion) and had become the mainland's biggest mutual fund.

Alibaba's fund offers rates of about 6 per cent, almost twice the rate of bank one-year deposits, by buying higher rate-paying deposit products in the mainland interbank market. The central government imposes interest rate restrictions on banks, with the upper limit on one-year deposits now capped at 3.3 per cent.

Alibaba's affiliated Small and Micro Financial Services has bought a controlling stake in Tianhong and is applying for a private banking licence with partner China Wanxiang.