After two years of crackdowns and sanctions, China seems ready to unlock the potential of the private sector through tech IPO developments.
Alibaba Group Holding and JD.com are reportedly involved in developments that could revive the dormant technology IPO landscape in China. Both tech giants are laying out plans to launch initial public offerings in the East Asian nation. These developments, three monumental debuts in China expected by 2023, could prop up the country’s faltering tech industry and reshape Hong Kong’s stock market.
Alibaba’s logistics arm, Cainiao Network Technology, recently started talks with banks about a public offering. In addition, two JD subsidiaries also recently applied for the sale of shares for the first time on Thursday. According to inside sources, the three expected listings could generate around $5 billion, or 6.6 Singapore dollars.
Developments from China’s technology initial public offering raise hopes that the prominent Asian economy will seek to unlock its potential in the private sector. In addition, the revival of Chinese technology IPOs is also ending a drought following the suspension of Ant Group’s record IPO last year. What’s more, the welcome development is a full-circle moment for Beijing after it cracked down on internet tech giants in 2021. This crackdown included tough regulatory sanctions on companies like Alibaba and Tencent, as well as strict requirements for foreign listings. .
Analyst Comments On The Development Of China Tech’s IPO
Bloomberg Intelligence analyst Catherine discussed opening up China to induce tech public listings this year, saying:
“(This) indicates Beijing’s support for more dynamic capital market activities within China’s technology sector in the future. This should help lift general market sentiment and listing anticipation for other giants within the sector.”
Several Chinese tech companies have resubmitted listing requests 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 the most prominent local tech players could follow suit sooner rather than later. Among these major tech IPO candidates are ride-sharing giant Didi Global, TikTok parent company ByteDance, and social media platform Xiaohongshu.
The Chinese government seeks to create a delicate balance between unlocking potentially billions of dollars in value and decreasing technological influence to “safe” levels. However, given the history of the past, many businessmen and company executives continue to mistrust the government’s intentions. While there is a lot to look forward to, there is still no guarantee that the IPO move will be able to boost companies in the long run.
Regardless, Chinese companies have outperformed their US and European counterparts so far this year in equity financing. This performance is fueled by expectations that the nation’s post-Covid reopening is still on the rise. By contrast, the rest of the world is facing an impending recession.
Alibaba Announces Restructuring Plans Amid IPO Development
Alibaba’s IPO plans come amid co-founder Jack Ma’s return to China and the company’s recent business restructuring announcement. Earlier in the week, Alibaba announced its intention to split into six business groups, each capable of seeking its own public listing. According to the Hangzhou-based company, the move will enable faster and more optimized capacity. Additionally, each business unit, including Cloud Intelligence Group and Digital Media and Entertainment Group, would have its own strategic priority. Each team will also have its own CEO and board of directors.
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Tolu is a Lagos-based blockchain and cryptocurrency enthusiast. He likes to demystify crypto stories down to the basics so that anyone anywhere can understand them without too much prior knowledge. When he’s not up to his neck in crypto-stories, Tolu likes music, loves to sing, and is an avid movie buff.
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