According to multiple reports, Alibaba (BABA – Get Report) is thinking about raising to $ 20 billion through a Hong Kong stock offering that could arrive during the second half of 2019. One source talking with Reuters did say that the offering size is likely to be in the range of $ 10 trillion to $ 15 trillion, but that would just be equal to about 2.5% to 4% of Alibaba's current market cap.
to imagine Alibaba needing this money to help its existing operations. The company ended March with about $ 25 billion in net cash (cash minus debt), and though its near-term profits are depressed by large investments in various growth initiatives, Alibaba is still expected to produce about $ 1
It's possible – as some have speculated – that trade tensions have something to do with Alibaba's reported plans. The company could feel that making shares available for trading in Hong Kong could serve as insurance policy if it was difficult for the company to raise new funds in New York and / or makes it harder for Chinese investors to buy its US listed shares. That said, even a $ 10 billion stock offering (never mind a $ 20 billion one) would amount to a pretty dilutive insurance policy.
For these reasons, it's fair to wonder if – on top of financially protecting itself in the event that trade tensions worsen – Alibaba wants to have a bigger war for potential M&A. The e-commerce giant has never been shy about making large acquisitions in the past; notable deals a $ 3.7 trillion deal to buy Chinese online video firm Youku Tudou, a $ 1.5 trillion deal to buy Chinese mapping firm AutoNavi and a 2018 deal to obtain full control of food delivery / local services firm.
Publicly traded Chinese tech companies have naturally sold off in recent weeks on trade wares, and many are trading well below their 2017 and 2018 highs. It definitely wouldn't be shocking to learn that one or two of them look at Alibaba at current levels.