Why is Alibaba in Cayman Islands?
China has prohibitions on foreign ownership, which means U.S. investors won’t actually own the company’s Chinese assets. Instead, investors will own a Cayman Islands company called Alibaba Group Holding Limited. The structure is risky and may even be illegal under Chinese law, The New York Times reports.
What happens to shares when a company goes private?
When a company goes private, its shares are delisted from an exchange, which means the public can no longer buy and sell the stock. The company may offer existing investors a price for their shares that may be above the current level.
Do you actually own Alibaba stock?
Under the VIE structure, BABA shareholders outside of China don’t actually own shares. Shares could become worthless for investors, and it’s a risk you should consider. The lack of ownership may deter shareholders from wanting to invest in a very undervalued business.
Can Chinese companies list their shares in New York?
Many public companies trading on Chinese domestic exchanges also list their shares on the stock exchanges in New York. Others choose straightaway to IPO on Wall Street.
Is Hong Kong the most developed Chinese financial market?
And Hong Kong is the most developed of the Chinese financial markets. The “country risk” penalty for mainland Chinese companies relative to companies in the U.S. is said by some to be only about 110 basis points. This must be low, however.
Will de-listing end the Wall Street Party for Chinese entrepreneurs?
A stubborn Beijing policy on the de-listing issue may well end the Wall Street party for Chinese entrepreneurs. They would still be able to trade their shares back in their own time zone. But they will pay a price – a concrete price – in higher capital costs.
Why are foreign investors investing aggressively in China’s Internet companies?
As a result, Internet companies in China have to rely on foreign capital for funding from the early stages, while foreign investors have been investing aggressively in Internet companies in China in anticipation that the Chinese market will exert its huge potential.