Technology & Science
Alibaba gets HKEX clearance to advance T-Head listing
T-Head filed confidentially in September. Hong Kong’s exchange waived the rule that would guarantee Alibaba shareholders shares or priority in the offering.
Executive summary
- The filing: Alibaba said the Hong Kong Stock Exchange has allowed it to proceed with a proposed spin-off of T-Head, its wholly owned chip subsidiary, which filed confidentially for a Main Board listing on Sept. 11.[1][1]
- The terms: The proposed offering would combine a Hong Kong public offer with a placing to institutional and professional investors. Its size, structure and effect on Alibaba's ownership remain undecided.[1][2][1][2]
- Shareholder access: HKEX waived the usual assured-entitlement requirement for Alibaba shareholders. The listing still requires further approvals.[1][1]
Alibaba said Tuesday that the Hong Kong Stock Exchange has cleared it to proceed with a proposed spin-off and separate listing of T-Head, its wholly owned chip subsidiary, which filed confidentially for a Main Board listing on Sept. 11.[1][1]
The proposed offering would sell T-Head H shares through a Hong Kong public offer and a placement to institutional and professional investors. Alibaba has not settled the offering's size or structure, or how much its own stake would fall.[1][2][1][2]
HKEX also waived a rule that calls for parent-company shareholders to receive an assured entitlement in a spin-off. Alibaba's filing says the entitlement may be provided by distributing subsidiary shares or giving parent shareholders priority to apply in the offering.[1][1]
With the waiver, Alibaba shareholders are not guaranteed a distribution of T-Head shares or priority in the offering. The proposed Hong Kong public offer remains part of the plan; the filing does not set later eligibility or allocation terms.[1][1]
T-Head is expected to remain an Alibaba subsidiary after the proposed listing, according to the exchange announcement. It remains wholly owned by Alibaba as of the announcement date.[1][1]
T-Head designs data-center chips for the Chinese market, Bloomberg News reported. Alibaba said a separate listing could help investors value the unit apart from its parent and give T-Head independent access to equity and debt markets.[1][2][1][2]
Alibaba said the proposed spin-off could also strengthen T-Head's profile with customers, suppliers and strategic partners and help the parent deploy financial resources more efficiently.[1][1]
Alibaba said providing the assured entitlement would entail disproportionate cost and effort, including a U.S. public offering and Securities and Exchange Commission registration, and cited legal and operational restrictions in China, including lock-up rules on existing shares. The company also said the spin-off would be insignificant relative to its assets, revenue and net income; these are Alibaba's stated grounds for the waiver.[1][1]
The waiver comes as HKEX consults on changes to its listing framework. In September, the exchange proposed removing the assured-entitlement requirement for spin-offs; the consultation remains open until Nov. 30, and the requirement remains in force while the proposal is considered.[3][3]
The proposal still requires approval from HKEX's Listing Committee, completion of a China Securities Regulatory Commission filing and final decisions by Alibaba and T-Head. Alibaba said it cannot assure whether or when the spin-off will proceed.[1][1]
Alibaba expects the spin-off's highest applicable percentage ratio under the listing rules to be below 5%, which it says would leave the transaction below the threshold for a discloseable transaction. That is the company's calculation under the rules.[1][1]