E-COMMERCE giant Alibaba Group will raise up to US$12.9 billion from its landmark Hong Kong listing and is set to price its shares at a 2.8 percent discount to their New York close, sources with direct knowledge of the matter said yesterday.

The deal, the largest share sale in Hong Kong for nine years and a world record cross-border secondary share sale, will be seen as a boost to Hong Kong following the city’s recent slide into its first recession in a decade.

Sources said Alibaba is poised to raise about HK$88 billion (US$11 billion), a symbolic total because the number 8 is associated with prosperity and good fortune in Chinese culture, in its mega Hong Kong stock offering as it’s telling prospective investors it will likely price the shares at about HK$176 each.

It could eventually rise to US$12.9 billion if a so-called “greenshoe” over-allotment option were exercised.

An Alibaba spokesman declined to comment on the pricing guidance given to investors.

Alibaba shares closed in New York on Tuesday at US$185.25, up 0.35 percent.

One of Alibaba’s New York-listed American Depositary Shares (ADS) is worth eight of its Hong Kong shares.

While the discount to Alibaba’s last close was set at 2.8 percent, analysts noted the price represented a 3.7 percent discount to the undisturbed Alibaba share price Nov. 12, the day before the deal was launched.

“I was expecting it to be done at around 4 percent-5 percent so this is about right,” Sumeet Singh, head of research at Aequitas and who publishes on research website SmartKarma, said.

“The deal represents just about 4.4 days of three-month average daily value traded and hence, relatively it’s not a big deal for a stock of Alibaba’s size.”

Alibaba’s deal comes amid a late-year rush of share sales, with Saudi Arabia’s state oil giant Aramco revving up to price an initial public offering so large it threatens to eclipse Alibaba’s own record US$25 billion float in 2014.

A deal at the top of Aramco’s price range would raise US$25.6 billion and value the company at US$1.7 trillion — short of the US$2 trillion it had originally sought.

Hong Kong’s army of small investors have welcomed the Alibaba deal, subscribing for so many shares they will be allotted the maximum 10 percent of the deal they could have got, three sources said.

(SD-Agencies)