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Alibaba-backed ZTO and Baozun rise in Hong Kong debuts

Investors gather cash as Ant Group prepares to face listing committee

ZTO Express is one of several express delivery companies that has received investment from Alibaba.   © Reuters

HONG KONG -- Shares of two New York-listed companies backed by Alibaba Group Holding rose on their debuts in Hong Kong on Tuesday, building momentum for the initial public offering of Ant Group as it prepares to face a stock exchange review.

ZTO Express, a courier company in which Alibaba held a pre-offering stake of 8.7%, rose as much as 12.5% from their offering price of HK$218. Baozun, which assists companies with e-commerce sales, went up as much as 3.7% from HK$82.90.

Alibaba has a 14% interest in Baozun, which raised $428 million through its secondary listing in Hong Kong. ZTO's offering brought in $1.27 billion. ZTO closed at HK$238 and Baozun at HK$84.

The capital raisings add to a flurry of secondary listings in Hong Kong by New York-listed Chinese companies, which was kicked off last November by Alibaba itself amid a push by U.S. politicians to curtail access to the country's capital markets.

The offerings have helped make Hong Kong Exchanges and Clearing the world's second-largest listing destination so far this year after the U.S. Nasdaq market.

Separately on Tuesday, HKEX announced that Chief Executive Charles Li will step down on Dec. 31, with Chief Operating Officer Calvin Tai succeeding him on an interim basis. It said that a board committee seeking Li's permanent replacement had made "considerable progress."

In May, HKEX had said Li would leave by October 2021 or earlier if a successor were found but said Tuesday that Li had expressed "his wish to retire early."

Ant Group, the world's most valuable financial technology company, according to its most recent valuations, would add to the city's tally with next month's planned $35 billion IPO -- which will be split between Hong Kong and Shanghai. If completed, the IPO of Ant, one-third owned by Alibaba, is set to be the largest ever.

Ant, which has already received the approval of Shanghai's STAR Market for its offering, is awaiting clearance from HKEX's listing committee. The company and its representatives are expected to meet with the committee before the market closes for public holidays on Thursday and Friday.

"Homecoming" listings by companies including Alibaba, online retailer JD.com and game developer NetEase have raised $28.1 billion in Hong Kong over the past year, data compiled by Refinitiv show. Other companies have raised almost $27 billion through primary listings in the city so far in 2020.

Bankers expect a lull between now and Ant's offering given the extended 8-day National Day holiday break starting Oct. 1 in China and investor inclination to hold on to cash to invest in Ant.

Ant has not disclosed how it intends to split its offering between Hong Kong and Shanghai. Existing shareholders are considering whether to sell down their holdings as part of the Hong Kong offering, which could tilt the balance of the IPO away from Shanghai.

Already, Hong Kong has seen inflows of almost 55 billion Hong Kong dollars ($7.1 billion) since the company, controlled by Alibaba founder Jack Ma, filed its IPO application a month ago, according to Hong Kong Monetary Authority data.

For the Shanghai portion of the IPO, Ant has signed up China Asset Management, Penghua Fund Management, China Universal Asset Management, Zhong Ou Asset Management and E Fund as strategic investors. The five companies last week opened new mutual funds that will allow small Chinese investors to indirectly access Ant shares as the STAR Market bars investors with less than 500,000 yuan ($73,368) in assets.

Each of the management companies sought to raise 12 billion yuan, with up to 10% earmarked for Ant shares. Penghua and E Fund stopped taking subscriptions after hitting their fundraising target the first day.

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