Hong Kong-listed Alibaba.com is spinning off its Internet services subsidiary, the e-commerce website disclosed Monday.
In a filing with the Hong Kong Stock Exchange, Alibaba.com said the subsidiary, Beijing-based HiChina Group, is considering listing its shares in the U.S. Details of the offering, including its size and price, haven’t been finalized.
HiChina is a full-service Internet infrastructure services provider that provides domain name services, web hosting, cloud-based services and website building solutions to small-and-medium enterprises on the mainland. Alibaba.com in 2009 bought an 85% stake in HiChina for $79 million.
Although the current global stock market turmoil has curbed investors’ appetite for IPOs, a stock analyst for Macquarie Capital Securities wrote that a HiChina spin-off “would likely offer some modest positive impact to (Alibaba.com’s) stock price as this shows management’s pro-activeness in seeking ways to provide support to the shares following the recent weakness.” Alibaba.com shares have fallen 54 percent this year, compared with a√Ç24√Çpercent decline for the Hang Seng Index.
In another move that could shore up Alibaba.com’s share price, management separately announced to employees and the Hong Kong Stock Exchange that the company on Monday bought back 3.2 million Alibaba.com shares on the open market. The share repurchases were made after the HiChina announcement.
In an e-mail to employees, Alibaba.com CEO Jonathan Lu said the buy-back took place as part of a program launched in 2008 when the board approved the expenditure of up to HKD 2 billion for share repurchases, of which a large amount has yet to be utilized.
In a show of confidence, Lu said “Our management will continue this buy-back program depending on stock market conditions,” adding that management did not think the current share price reflects the recent financial performance and future prospects of Alibaba.com, the world’s largest business-to-business marketplace.√ÇAlibaba.com shares closed Monday at HKD 6.42, down 8.16 percent.
