Attendees pass by an Alibaba.com display at CES 2019 in Las Vegas.
David Becker | Getty Images
Alibaba is looking to carry out a stock split, a move it says could help with further fundraising activities.
Under the proposal, the Chinese e-commerce giant will split one ordinary share into eight. That would mean the current number of ordinary shares — which stands at 4 billion — will increase to 32 billion.
Shareholders will need to vote on this at the company’s annual general meeting on July 15 in Hong Kong. If approved, the stock split will go into effect no later than July 15, 2020, Alibaba said.
Alibaba is reportedly looking into an initial public offering in Hong Kong which could raise as much as $20 billion.
“The Board of Directors is proposing the Share Subdivision to increase the flexibility for the Company in future capital market activities,” Alibaba said in a statement on Monday.
“Among other reasons, the one-to-eight share subdivision will increase the number of shares available for issuance at a lower per share price, and the Board of Directors believes that this will increase flexibility in the Company’s capital raising activities, including the issuance of new shares,” the statement added.
There are several reasons that companies carry out stock splits. One is to increase the number of shares with the hope of attracting new investors. Another is to lower the price of each share if a company feels that it has become too high.
When Alibaba went public in the U.S. in 2014, it priced its shares at $68 a piece. Alibaba shares closed a $158.1 on Friday.
Other major technology firms have carried out stock splits. One example is iPhone-maker Apple, which has done a stock split four times since it went public in 1980.
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