Alibaba Group Holding Ltd to acquire a 60% stake in ChinaVision, turns to the U.S. for IPO

According to people familiar with the matter, Alibaba Group Holding Ltd, which is the biggest e-commerce company in China, is almost certain to prefer New York over Hong Kong for its initial public offering. The companys IPO is said to be one of the biggest ones ever.

As reported by the Financial Times, one of the people with knowledge of the process said Alibaba Group Holding Ltd is no longer “even engaged” with the Hong Kong Stock Exchange, and another one reported that its is “95% certain” about choosing a New York listing. The opinion of a third person was cited by the Financial Times: “I can categorically tell you that Alibaba will not list in Hong Kong.”

In addition, Alibaba Group Holding Ltd has announced that it reached an agreement with the Chinese television and film production firm ChinaVision Media Group Ltd to acquire a 60% stake in it. The deal is estimated to 6.24 billion Hong Kong dollars (804 million dollars) and is considered to be able to provide Alibaba with the opportunity to offer entertainment content to its users. According to a filing of ChinaVision from Wednesday, the stake owned by Alibaba will be increased from 27% to 70.8% with the purchase of the stock.

Alibaba Group Holding Ltd revealed in an e-mailed statement: “We are pleased to collaborate with the ChinaVision Media Group to explore future business opportunities as part of Alibabas digital entertainment strategy.”

One of the analysts working for Guotai Junan International Holdings Ltd – Ricky Lai commented this move of the company for Bloomberg: “The acquisition can help Alibaba increase content on its platform. It could add certain entertainment and media content into its instant messaging app, Laiwang, to increase the popularity of the app.”

The company surprisingly shifted its plans for Hong Kong listing last years, saying that it would be a good idea to turn itself to the U.S. However, it is said to be still observing and considering the possibility for an initial public offering in Hong Kong anticipating some rule changes that would become more suitable for its board structure. Unfortunately for Alibaba, the Chinese regulator is still not persuaded that there is an objective reason for changing its rules.