October 1, 2020

Cayman Islands’ Grand Court approves privatisation plan of Alibada.com


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Alibaba.com (1688.HK) will be delisted from the Hong Kong Stock Exchange and Clearing today (20), less than five years after its initial public offering on November, 6, 2007, reports Securities Daily.

Alibaba.com, founded in 1999, was the only public firm of Alibaba Group and is registered in the Cayman Islands.

Five days ago, the Cayman Islands’ Grand Court approved a privatisation plan of Alibaba.com. The Hong Kong Stock Exchange and Clearing previously allowed the company to delist.

It was reported a number of Chinese companies listed in foreign markets were advised to delist due to complicated financial regulations and foreign markets have low valuations while pressure on performance is relatively high.

According to Ma Yun, Chairman of Alibaba Group, privatization relieves pressures usually borne by public companies and provides the ability to set up a long term development plan that is most beneficial to clients.

The privatisation also provides its existing shareholders with an attractive opportunity to realize a return on their investment, that usually requires a long period.

The B2B subsidiary of Alibaba Group made a large adjustment, switching its focus from an increase in membership to improving the buyer’s experience in its trading platform, an act that will considerably slow the growth of paying members.

However, the company has a confident long term perspective even though the act might affect short term financial performance.

The strategic switch is indeed a result of insufficient growth in its B2B businesses, said Xie Wen, Former President of Yahoo China. B2B businesses have no room to grow as domestic Internet competition is fierce.

When it went public in 2007, B2B operations were a major part of the group and was also the most valuable part.

Fang Xingdong, an observer, said that Taobao, Alipay, and Tmall are the most valuable businesses of Alibaba Group. Alibaba.com raised HK$11.6 billion on November, 6 2007, the largest initial public offering by a Chinese Internet company at that time.

The share price surged to HK$39.8 on its debut, followed by a consistent fall to as low as HK$3.46.

According to an internal mail sent by Ma, the B2B model was facing great challenges and needs a speedy switch as small and medium sized companies are suffering from rising costs on raw materials, foreign exchange, and labor.

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