Mainland internet giant Alibaba Group has missed its window to sell shares in a New York initial public offering this year and may have only a matter of weeks left before the same happens in Hong Kong, financial industry experts told the South China Morning Post.
The timeline of regulatory requirements in both jurisdictions has ramped up the pressure for Alibaba to reach an accord on a listing with the authorities in Hong Kong if it wants to get a deal done this year, financial sector sources say.
Talks with Hong Kong regulators have been stalled by a stand-off over the firm's desire to retain a partnership structure that the authorities fear could give too much voting power to company executives at the expense of ordinary shareholders.
Fresh details of the controversial partnership programme emerged yesterday in an e-mail sent to Alibaba staff yesterday by company founder Jack Ma Yun, a copy of which was obtained by the Post.
The firm wants to be allowed to maintain a partnership structure to nominate a majority of board candidates, on whom shareholders would then be able to vote. Regulators say that gives partners more rights than ordinary shareholders, effectively creating a dual shareholding structure not allowed for new listings in Hong Kong.
The stalemate has led to speculation that Alibaba would switch to New York where dual share structures are allowed.
Edward Au, a partner at Deloitte specialising in Hong Kong and China listings, said that would take "at least four months", including about one month to harmonise the accounting regime the firm uses with US listing rules.
"The deal may even be forced to go public in the second quarter of next year in Hong Kong if it doesn't get done this year," Au said.
That view was echoed by Paul Lau, a capital markets partner at KPMG China.
Alibaba would likely need to file an A1 application, a formal step to apply for a listing, to Hong Kong Exchanges and Clearing by the end of this month at the latest if it wanted a Hong Kong listing this year, Lau said.
Any later and the application would be subject to new sponsor regulations which come into effect on October 1, obliging firms to allow at least a two-month period between the date of a listing sponsor's formal appointment and a listing application, Lau said.
That would put a share sale firmly in the dead zone in the final weeks of the year where investment bankers hate to have to sell stock.
"We've not hired underwriters nor selected a location," a spokesman for Alibaba told the Post, declining further comment.
Delaying into next year could put a big dent into the potential HK$100 billion analysts estimate Alibaba could raise if the deal comes to market this year, given the pent-up demand among fund managers after a lack of major new offerings this year.
If Alibaba joins the swelling pipeline of deals for early next year, it risks coming to market as an expected jump in global interest rates fuelled by an anticipated scaling back of the US Federal Reserve's quantitative easing programme jolts stock market valuations, money managers say.
Sources close to Alibaba insist the firm is not working towards a particular listing timetable and that management is "not nervous about a ticking clock".