HONG KONG The door is closing fast for Alibaba Group Holding Ltd to complete an initial public offering in 2013.
The Chinese e-commerce company is locked in a debate with Hong Kong regulators over its shareholding structure, delaying the launch of the widely anticipated sale that may be worth more than $15 billion.
The more time it takes to reach a compromise on this issue, the less time Alibaba will have before the end of the year to submit its listing documents to Hong Kong regulators.
"This doesn't look like a 2013 IPO any more," one person familiar with the IPO discussions told Reuters. Delaying the IPO into next year carries the risk of stock market uncertainty and misses out on the technology-heavy Nasdaq's 23.4 percent gain so far this year.
Alibaba has yet to formally outline an IPO timetable, but people familiar with the matter say the company has been preparing for a listing over the past few months. The process is now delayed in Hong Kong by issue of who will control the company's board after it goes public.
Alibaba's founders and senior management have been lobbying the Hong Kong stock exchange to stay in charge of decision-making even after the IPO, but the regulators have in the past rejected corporate structures that failed to treat all shareholders equally.
Starting October 1, companies must formally appoint IPO sponsors - in other words, investment banks - at least two months before filing a listing application, according to new rules set out by the Hong Kong exchange.
Applications usually take around one month to process, and if approved, a company would need another month at least to market the deal.
As Alibaba has yet to mandate investment banks, it cannot file any documents. If Alibaba appoints sponsors soon after the new regulations kick in, the earliest they can launch the offer is February 2014.
A Hong Kong-based securities lawyer said Alibaba could get around the two-month sponsorship rule by mandating banks before October 1 and then saying that they have been working on the deal long beforehand.
The lawyer, however, said that argument was unlikely to succeed.
"We have no timetable, no location selected and no underwriters," Alibaba spokesman John Spelich said.
Alibaba prefers a Hong Kong listing over New York because of its previous experience in dealing with regulators there after the 2007 IPO of its Alibaba.com unit, people familiar with the company say.
U.S. exchanges also require companies to adhere to more onerous disclosure rules, lawyers say. Even if Alibaba does decide to take the New York route, it appears to have left it too late, said Keith Pogson, managing partner for financial services at Ernst & Young in Hong Kong.
"Even a U.S. listing this year is tough, though depending on how advanced their preparations are, from an accounting and legal perspective, they could get it done before the holidays kick in December," he told Reuters.
"But if they miss that window, then this is a first quarter 2014 event at the earliest."
The major banks jostling for a role in the offer would be bitterly disappointed: the IPO is estimated to yield about $260 million in commissions, which would make Alibaba the biggest Chinese fee payer to global investment banks in a decade and help said banks meet their 2013 targets.
Yahoo Inc, owner of a 24 percent in the Chinese e-commerce company, would also be frustrated. The company is keen to sell part of its shareholding when the IPO hits.