UPDATED 15:35 EDT / NOVEMBER 20 2019

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Alibaba raises $11.2B from investors in year’s biggest stock sale

Chinese e-commerce giant Alibaba Group Holding Ltd. raised $11.2 billion on the Hong Kong stock exchange today in the year’s biggest listing. 

The company structured the stock sale as a secondary offering, since it already trades on the New York Stock Exchange. The company’s NYSE debut back in 2014 set a record as well at the time. Alibaba priced its shares at the equivalent of $22.50 apiece for the Hong Kong listing, which represents a 2.9% discount to its NYSE closing price on Tuesday.

Alibaba could potentially make the offering even bigger if the right conditions emerge. The company has a so-called greenshoe option to sell up to $1.9 billion worth of additional shares, which increase the total haul to $12.9 billion on the top end.

Alibaba likely wouldn’t have a hard time finding interested buyers: CNBC reported that Alibaba stopped taking orders from institutional investors a half-day earlier than originally scheduled because of strong demand.

The enthusiasm for the stock was no doubt fueled at least in part by Alibaba’s most recent quarterly results. For the three months ended Sept. 30, the company posted revenues of 114.92 billion yuan, or $16.74 billion, a 42% improvement over the same period a year ago. Alibaba’s core retail business grew by 40%, while its cloud computing business saw sales soar 62% on a year-over-year basis, to more than $1.3 billion. 

Alibaba’s cloud gains are partially the result of heavy spending on product development. One of the latest fruits of the company’s engineering investments is the Hanguang 800, an internally designed machine learning chip unveiled in September that can speed up tasks such as image labeling. Alibaba eventually plans to make the processor available to other companies via its cloud platform.

According to data from Gartner Inc., the company last year ranked as the third-largest player by revenue in the infrastructure-as-a-service industry, mostly thanks to its dominance of the Chinese market. Amazon Web Services Inc. and Microsoft Corp. came in first and second, respectively, while Google LLC took fourth place.

Over in the e-commerce market, Alibaba is already shaping up to have a strong fiscal third quarter. The company’s online marketplaces processed a record $38.4 billion worth of orders during the Singles’ Day shopping festival that took place in China this month, up from $30.7 billion last year.

Photo: Alibaba

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