Alibaba suffers rare ‘down round’ investment as Babytree’s HK IPO prices low: sources

HONG KONG (Reuters) – China’s Babytree Team, a parenting web-site operator, has priced its Hong Kong IPO at the bottom of a marketing and advertising assortment, individuals close to the deal claimed, lowering its valuation and implying a ‘down round’ for trader Alibaba Team Holding Ltd (BABA.N).

FILE Picture: The company brand of BabyTree Group is exhibited at a information convention ahead of its IPO in Hong Kong, China November 14, 2018. REUTERS/Bobby Yip

Babytree will provide shares in the original community presenting (IPO) at HK$6.80 each – the minimal close of a assortment that reached HK$8.80 – to increase $217 million, instead of up to the $1 billion initially qualified.

The IPO will price Babytree at $1.5 billion, fairly than the $2 billion valuation in late May when Alibaba invested $214 million. That would mark a unusual occasion of a tech-similar business suffering a down round, or a fall in valuation following new expenditure.

Globally, 11.8 per cent of all deals involving enterprise funds this 12 months have endured down rounds, according to sector data provider PitchBook. That is the cheapest charge in at least a ten years and when compared with the 15.2 per cent of last 12 months.

For Alibaba, Babytree represents one particular of 130 investments totaling $48 billion since 2015, confirmed information from Refinitiv.

Babytree and Alibaba did not give an quick comment. The people today shut to the deal declined to be discovered as the details was not yet public.

If Babytree thoroughly exercised its ‘green shoe’ selection, letting it to promote up to 15 percent much more shares in a limited window following listing, its article-shoe valuation will arrive at $1.69 billion.

Babytree is the most recent in a collection of listing hopefuls to see funding ambitions considerably scaled again in Hong Kong, even as the money hub is on monitor to grow to be the world’s best IPO middle by quantity this 12 months.

Several companies were being caught up in early-calendar year optimism that markets would steady or make improvements to, and made a decision to continue with IPO designs even as situations worsened. This calendar year, Hong Kong share selling prices have fallen 14 p.c amid issue about the effects of curiosity price rises and deteriorating Sino-U.S. trade relations.

This 7 days, Tongcheng-Elong Holdings Ltd (0780.HK), whose backers consist of Tencent Holdings Ltd (0700.HK), priced its shares at HK$9.80 just about every, right after offering the inventory at HK$9.75 to HK$12.65.

The Chinese on-line journey service company lifted $232 million, compared with its preliminary target of $800 million to $1 billion, folks close to the offer instructed Reuters.

Tongcheng-Elong did not instantly answer to a request for remark.

So significantly this calendar year, $33.2 billion has been elevated by means of Hong Kong IPOs, Refinitiv knowledge showed. That compares with the $13.9 billion raised in 2017 and places the territory on system for its best yr because 2010.

Reporting by Julie Zhu and Julia Fioretti Added reporting by Kane Wu Editing by Jennifer Hughes and Christopher Cushing

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