Alibaba's Tsai says will 'never' change partnership structure for Hong Kong IPO

Wed Mar 12, 2014 8:12am EDT
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By Paul Carsten and Anne Marie Roantree

HONG KONG (Reuters) - Alibaba Group Holding IPO-ALIB.N will not change its partnership structure in order to list on the Hong Kong stock exchange, Executive Vice Chairman Joe Tsai told Reuters in an exclusive interview in Hong Kong on Wednesday.

"The one thing I can't understand is people think we're going to change our partnership structure just to accommodate a listing in Hong Kong, that's never going to happen," said Tsai, who also defended the company's move into fund management in mainland China.

"Hong Kong is a place where people take the one share-one vote principle very seriously," he added. "That's how they feel is the one thing that maintains the integrity of the market - I respect that."

Tsai's comments were the strongest defense so far by Alibaba of its partnership structure, putting the ball in Hong Kong's court to change its listing rules soon or risk losing what's potentially the biggest-ever initial public offering by an Internet company, surpassing social media giant Facebook Inc's (FB.O: Quote) $16 billion listing in 2012.

The insistence on maintaining the existing shareholding structure keeps the doors open for a listing overseas, with both New York and London having been raised as potential locations, although Tsai wrote in a blog post last September that Hong Kong is the "natural" first choice for Alibaba's IPO.

The Chinese e-commerce titan has been at odds with Hong Kong regulators, which last year rejected Alibaba's plans for an IPO in the city with a shareholder structure that allowed a group of top managers and founders to nominate and control the board, while holding only around 13 percent of the company's shares.

Hong Kong Exchanges and Clearing Ltd (HKEx) (0388.HK: Quote) and the Securities and Futures Commission have been discussing since late last year potential changes to listing rules to allow for "weighted voting rights". Discussions over a paper to be put for public consultation should last through the first quarter.

'HAPPY VAMPIRES'   Continued...

A woman walks past an Alibaba advertisement on a wall in Hangzhou, Zhejiang province September 26, 2013. REUTERS/Chance Chan