Following two years of crackdowns and sanctions, China appears ready to unlock private sector potential via tech IPO developments.
Alibaba Group Holding and JD.com are reportedly involved in developments that could revive the long-dormant tech IPO landscape in China. Both tech giants are setting plans to float initial public offerings in the East Asian nation. These developments, three expected 2023 monumental Chinese debuts, could prop up the country’s flailing tech industry and reshape Hong Kong’s stock market.
Alibaba’s logistics arm, Cainiao Network Technology, recently initiated talks with banks regarding a public offering. In addition, two JD subsidiaries also recently filed for first-time share sales on Thursday. According to inside sources, the three expected listings could generate around $5 billion, or 6.6 Singaporean dollars.
The China tech IPO developments stoke hopes that the prominent Asian economy seeks to unlock its private sector potential. Furthermore, the Chinese tech IPO revival also ends a drought following the suspension of Ant Group’s record IPO last year. Additionally, the welcome development is a full-circle moment for Beijing after it cracked down on internet tech giants in 2021. This crackdown included tight regulatory sanctions on companies such as Alibaba and Tencent, as well as stiff requirements for foreign listings.
Analyst Comments on China Tech IPO Development
Bloomberg Intelligence analyst Catherine discussed China’s openness to inducing tech public listings this year, saying:
“(It) indicates Beijing’s support for more buoyant capital market activities within China’s tech sector ahead. This should help lift overall market sentiment and anticipation for the listing of other mammoth companies within the sector.”
Several Chinese tech companies have resubmitted listing applications for Hong Kong in the past week. These include logistics giant Lalatech Holdings, fitness app Keep, as well as social media app Soulgate. Furthermore, even more prominent local tech players could follow suit sooner rather than later. Notable among these more significant tech IPO candidates are ride-hailing giant Didi Global, TikTok parent ByteDance, and social media platform Xiaohongshu.
The Chinese government seeks to create a delicate balance between potentially unlocking billions of dollars in value and diminishing tech influence to ‘safe’ levels. However, given past antecedents, numerous entrepreneurs and business executives remain wary of the government’s intentions. While there is much to look forward to, there is still no guarantee that the IPO move could spur businesses long-term-wise.
Regardless, Chinese firms have outperformed their US and European counterparts so far this year on equity financing. This performance is fueled by expectations that the nation’s post-Covid reopening is still in its ascent. Conversely, the rest of the world contends with a looming recession.
Alibaba Announces Restructure Plans amid IPO Development
Alibaba’s IPO plans come amid the return of co-founder Jack Ma to China and the company’s recent business restructuring announcement. Earlier in the week, Alibaba announced its intent to split into six business groups, each capable of pursuing its own public listing. According to the Hangzhou-based company, the move will allow for swift and more streamlined capacity. Furthermore, each business unit, including Cloud Intelligence Group and Digital Media and Entertainment Group, would have its own strategic priority. Each outfit will also have its own dedicated chief executive officer and board of directors.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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