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Arm Holdings
priced its initial public offering at $51 a share. That’s at the top of the expected range of $47 to $51, giving the chip design company a valuation of $54.5 billion on a f…
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Arm Holdings is set for a blockbuster initial public offering which will test market appetite for an important technology company. However, its targeted valuation suggests it is accepting it won’t be the next
Nvidia
…
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HONG KONG — Top executives of Chinese e-commerce and financial giant Alibaba said Thursday that the company is moving toward giving up control of some of its business units in a transition toward becoming a capital operator to optimize the value of its sprawling businesses.
Alibaba CEO Daniel Zhang outlined details of a plan announced earlier this week to split Alibaba into six main groups as a prelude toward stock listings of some of its companies. The restructuring marks a new stage in Alibaba’s growth after a series of setbacks as regulators cracked down on it and other tech companies.
Alibaba, whose headquarters is in the eastern city of Hangzhou, will be “in the nature of a holding company that is the controlling shareholder of the business group companies,” Zhang said in a conference call.
Alibaba’s CFO, Toby Xu, said the company would continue to evaluate the strategic importance of group companies after they go public and decide whether or not to retain control. He declined to say when they might go public.
“We believe the market is the best litmus test, so each business group company can pursue independent fundraising and IPOs as and when they are ready,” Xu said.
Alibaba’s stock prices in Hong Kong and New York have rallied nearly 15% since the restructuring was announced Tuesday. The firm’s Hong Kong-listed stock was up 0.9% by midday Thursday.
The plan, and the recent return of Alibaba founder Jack Ma to China after months abroad appear to mark a turnaround after several hard years. Chinese regulators singled out Alibaba for scrutiny in a crackdown on technology and internet companies, putting the brakes on a planned initial public offering in 2020 of Alibaba’s financial affiliate Ant Group.
Ma had kept a low profile with few public appearances since Nov. 2020, when he had publicly criticized China’s regulators and financial systems during a speech in Shanghai.
Ant had been set to raise $34.5 billion in what would have been the world’s largest share offering at the time. Alibaba was later investigated and fined $2.8 billion for breaching antitrust rules as Chinese authorities cracked down on the once-freewheeling technology industry.
“The looser connections between the business units is in line with the regulatory stance of encouraging competition,” said an analyst’s note from Moody’s Investor Service.
Alibaba is to split into its Cloud Intelligence Group, Taobao Tmall Business Group, Local Services Group, Global Digital Business Group, Cainiao Smart Logistics and Digital Media and Entertainment Group. Each group apart from Taobao Tmall could potentially seek an initial public offering. Taobao Tmall will remain wholly-owned by Alibaba Group.
Among other things, the restructuring plan might allay past antitrust concerns, since as Zhang explained, each Alibaba business unit would be empowered to make its own decisions and raise capital independently. He said that having business units operate independently should also foster innovation and growth after years of harsh COVID-19 restrictions that battered China’s economy.
Alibaba’s restructure — the first of its kind in the Chinese technology industry — also could serve as an example for similar companies such as online games company Tencent to follow suit. Tencent’s shares rallied after Alibaba’s announcement on Monday.
“We think that Alibaba’s new organizational structure could be used by Chinese regulators as a template for other Chinese Big Tech firms,” said a report by CreditSights.
Francis Lun, CEO of Geo Securities in Hong Kong, said that in the short term Alibaba’s move will likely allow the group to raise more capital. But it might be more difficult for the company to stay competitive in mergers and acquisitions.
“When you split into six business units, you’d just be a lightweight competing against the heavyweights such as Apple, Amazon and Alphabet,” Lun said.
He pointed out that only Alibaba’s e-commerce and cloud units were profitable and that in the long-term, the other units may not succeed.
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HONG KONG — Top executives of Chinese e-commerce and financial giant Alibaba said Thursday that the company is moving toward giving up control of some of its business units in a transition toward becoming a capital operator to optimize the value of its sprawling businesses.
Alibaba CEO Daniel Zhang outlined details of a plan announced earlier this week to split Alibaba into six main groups as a prelude toward stock listings of some of its companies. The restructuring marks a new stage in Alibaba’s growth after a series of setbacks as regulators cracked down on it and other tech companies.
Alibaba, whose headquarters is in the eastern city of Hangzhou, will be “in the nature of a holding company that is the controlling shareholder of the business group companies,” Zhang said in a conference call.
Alibaba’s CFO, Toby Xu, said the company would continue to evaluate the strategic importance of group companies after they go public and decide whether or not to retain control. He declined to say when they might go public.
“We believe the market is the best litmus test, so each business group company can pursue independent fundraising and IPOs as and when they are ready,” Xu said.
Alibaba’s stock prices in Hong Kong and New York have rallied nearly 15% since the restructuring was announced Tuesday. The firm’s Hong Kong-listed stock was up 0.9% by midday Thursday.
The plan, and the recent return of Alibaba founder Jack Ma to China after months abroad appear to mark a turnaround after several hard years. Chinese regulators singled out Alibaba for scrutiny in a crackdown on technology and internet companies, putting the brakes on a planned initial public offering in 2020 of Alibaba’s financial affiliate Ant Group.
Ma had kept a low profile with few public appearances since Nov. 2020, when he had publicly criticized China’s regulators and financial systems during a speech in Shanghai.
Ant had been set to raise $34.5 billion in what would have been the world’s largest share offering at the time. Alibaba was later investigated and fined $2.8 billion for breaching antitrust rules as Chinese authorities cracked down on the once-freewheeling technology industry.
“The looser connections between the business units is in line with the regulatory stance of encouraging competition,” said an analyst’s note from Moody’s Investor Service.
Alibaba is to split into its Cloud Intelligence Group, Taobao Tmall Business Group, Local Services Group, Global Digital Business Group, Cainiao Smart Logistics and Digital Media and Entertainment Group. Each group apart from Taobao Tmall could potentially seek an initial public offering. Taobao Tmall will remain wholly-owned by Alibaba Group.
Among other things, the restructuring plan might allay past antitrust concerns, since as Zhang explained, each Alibaba business unit would be empowered to make its own decisions and raise capital independently. He said that having business units operate independently should also foster innovation and growth after years of harsh COVID-19 restrictions that battered China’s economy.
Alibaba’s restructure — the first of its kind in the Chinese technology industry — also could serve as an example for similar companies such as online games company Tencent to follow suit. Tencent’s shares rallied after Alibaba’s announcement on Monday.
“We think that Alibaba’s new organizational structure could be used by Chinese regulators as a template for other Chinese Big Tech firms,” said a report by CreditSights.
Francis Lun, CEO of Geo Securities in Hong Kong, said that in the short term Alibaba’s move will likely allow the group to raise more capital. But it might be more difficult for the company to stay competitive in mergers and acquisitions.
“When you split into six business units, you’d just be a lightweight competing against the heavyweights such as Apple, Amazon and Alphabet,” Lun said.
He pointed out that only Alibaba’s e-commerce and cloud units were profitable and that in the long-term, the other units may not succeed.
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Alibaba
stock was on track for its best day in months after the Chinese technology giant announced that it would split itself into six units, opening the door for its subsidiary businesses to go public.
Akin to Alibaba (ticker: BABA) shifting from conglomerate to holding company, the move is designed to unlock shareholder value and foster market competitiveness, said the group, which is one of China’s largest and most important companies. It’s a nod both to investors who have weathered years of losses for the stock—caused largely by regulatory pressures—as well as regulators who have hammered Alibaba and the rest of the Chinese tech sector over competition concerns since late 2020.
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Silicon Valley Bank’s collapse is just the latest example of how a historic slowdown in IPOs is producing a minefield of unexpected consequences. The shuttered market for US initial public offerings — and the resultant lack of proceeds for cash-strapped firms — has created myriad complications for Corporate America. From contributing to the collapse of a bank […]
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China has announced new rules on overseas IPOs, potentially sparking the resumption of Chinese companies listing in New York.
Under the new rules, the China Securities Regulatory Commission (CSRC) will vet any overseas listing applications, effective from March 31. The regulator has the power to block such IPOs, and the rules make clear listings must not endanger national security.
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DUBAI, United Arab Emirates — The Abu Dhabi National Oil Company’s gas processing firm said Friday it plans to sell 4% of its shares to local investors in the latest initial public offering to be made by a state-run energy company in the Middle East.
The move follows a similar IPO by the Saudi oil giant Aramco in 2019 that raised some $30 billion, and comes months before the United Arab Emirates is set to host this year’s U.N. climate talks.
The UAE, which is home to Abu Dhabi and Dubai, selected Sultan al-Jaber, the CEO of ADNOC, who also oversees renewable energey projects, to chair the COP28, angering climate change activists.
ADNOC has access to 95% of the UAE’s natural gas reserves, the world’s seventh largest. It supplies gas to more than 60% of the local market and exports to more than 20 countries. The company had a net income of $4.2 billion in the first 10 months of 2022, up from $3.6 billion in all of 2021.
It plans to list over 3 billion shares on the Abu Dhabi stock exchange for purchase by local investors starting Feb. 23.
“Natural gas is central to the energy transition,” Khaled Al Zaabi, acting group CFO of ADNOC, said in a press release. “ADNOC Gas is well-positioned to responsibly harness our significant natural gas resources, while driving efficiencies, delivering value, and reliably supplying this key fuel to meet the world’s growing energy needs.”
ADNOC Gas boasts a total gas processing capacity of over 10 billion standard cubic feet per day and a liquid processing capacity of 29 million tonnes per year. ADNOC announced the discovery of up to 2 trillion standard cubic feet of gas in an offshore area in February 2022.
Oil and gas have powered the UAE’s rapid transformation into a high-tech global business hub home to futuristic cities and one of the world’s busiest airports. Analysts believe the Emirates is trying to maximize its profits as the world increasingly turns to renewables.
The Emirates says it has invested more than $50 billion in renewable energy projects across 70 countries and plans to invest $50 billion more in the next decade. It has also vowed to become carbon neutral by 2050, though it’s unclear how it would reach that target.
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In this June 15, 2015 file photo, a Saudi man walks through the Tadawul Saudi Stock Exchange in the … [+]
The Middle East is bucking a global slump in stock market listings, with an almost 300% rise in the number of companies making their debuts on bourses across the region so far this year.
According to data from consultancy firm EY, there have been 31 initial public offerings (IPOs) in the region in the first nine months of 2022, up 288% on the same period in 2021. Between them, these deals have raised some $14.7 billion, up 550% year-on-year.
The pace of new listings has been slowing down as the year has progressed, but the oil windfall that the region’s energy producers are enjoying means the level of activity is expected to remain relatively high for some time.
There were 15 IPOs in the first three months of the year, raising a combined $4 billion. In the second quarter the number of listings dropped to nine, although the amount raised grew to $9 billion.
In the most recent quarter, from July-September, there were seven listings which between them raised $1.5 billion in proceeds. The largest of these was the Dubai road toll operator Salik, which raised more than $1 billion. However, most of the deals were in Saudi Arabia, accounting for five of the seven. The only other one was in Morocco, where Disty Technologies raised $17m on the Casablanca Stock Exchange.
Despite the relative slowdown over the course of the year, the Middle East and North Africa (MENA) is outperforming most other parts of the world when it comes to stock market activity.
In the first three quarters of this year, there have been a total of 992 IPOs worldwide, according to EY, some 44% less than in the opening nine months of 2021. Between them they have raised $146 billion, a 57% drop year-on-year. The consultancy says the U.S. is set to record its lowest proceeds from stock market listings in almost 20 years.
“Despite IPO volumes and values declining significantly in the majority of other global markets, the MENA region continues to forge its own path with a steady stream of new listings in Q3, adding to the large number of IPOs already announced across exchanges in the year-to-date,” said Brad Watson, MENA strategy and transactions leader at EY.
Many parts of the world are facing constraints on economic activity, with high oil prices feeding into rising inflation and dampening investor sentiment. However, in the Middle East many countries are enjoying a surge in oil and gas revenues, which is leading to improved investor sentiment. As a result, most local stock markets have been rising this year, led by the Abu Dhabi Stock Exchange which is up 15% so far this year.
There continues to be a strong pipeline of new deals, with EY describing the outlook for IPOs in the MENA region in the final quarter of 2022 and into 2023 as “promising”.
Gregory Hughes, EY’s IPO and transaction diligence leader for the MENA region, said investor confidence in the region has remained high “despite challenging financial headwinds across the world. As we look into Q4, we see no signs of that changing.”
Among the deals coming to the market are Saudi utility Marafiq, which secured $897 million in orders for its shares in early October and is due to make its market debut in the coming days. The Dubai government is also planning to sell a 10% stake in district cooling firm Empower next month, with a book-building exercise expected to start on October 31.
Slightly further out, oil giant Saudi Aramco is planning to sell a stake in its energy trading division either later this year or in 2023 and grocery retailer Lulu Group International is planning to list on the Abu Dhabi Securities Exchange next year.
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Dominic Dudley, Contributor
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