Alibaba Health raises $1.3 billion in Hong Kong's biggest secondary share sale in five years

HONG KONG (Reuters) - Alibaba Health Information Technology has raised nearly $1.3 billion in Hong Kong’s largest follow-on share sale since 2015, and industry experts say this could prompt more firms to tap investors for cash in the Asian financial hub.

FILE PHOTO: A logo of Alibaba Group is seen at the company's headquarters in Hangzhou, Zhejiang province, China, November 18, 2019. REUTERS/Aly Song

The Chinese company, an arm of internet retail giant Alibaba Group, said on Wednesday it would issue 499 million new shares priced at HK$20.05 ($2.59) apiece, an 8% discount to the stock’s HK$21.80 closing price in Hong Kong on Tuesday.

Alibaba Health shares were down 2.75% at HK$21.20 in the first session since the deal was finalised.

The size of the deal was increased by 25% during the institutional bookbuild overnight on high demand from investors. This is the largest ever healthcare follow-on in Hong Kong.

The transaction, according to experts, could trigger more capital raisings in Hong Kong as companies take advantage of positive sentiment towards healthcare stocks amid the coronavirus pandemic.

“Follow-on deals can be done very quickly, it comes down to sentiment and price,” said a capital markets lawyer, who could not be named because he was not authorised to speak to media.

“Companies in healthcare and biotech are doing very well, I think we will see more deals like this happening in Hong Kong.”

The deal was the largest Hong Kong follow-on share sale since CSPC Pharmaceutical Group’s $1.26 billion transaction in 2015, Refinitiv data showed.

Ahead of the Alibaba Health deal, Hong Kong’s equity capital markets volumes for 2020 stood at $42.7 billion versus $22.3 billion at the same time last year, Dealogic data shows.

Alibaba Health said the cash would be used to develop its pharmaceutical e-commerce business, which has benefited from the growth of the online service sector amid the health crisis.

Reporting by Scott Murdoch; Editing by Kenneth Maxwell and Himani Sarkar