Chinese e-commerce giant Alibaba Group Holding Ltd. pulled off the biggest-ever initial public offering on Wall Street five years ago and today sports a market capitalization north of $450 billion. So why is it looking to raise billions more now in Hong Kong, where months of violent pro-democracy protests have unsettled investors and helped tip the city into recession? Fresh capital is not the only reason.

1. Why is Alibaba doing this?

At the most basic level, it’s raising at least $11.2 billion and up to $12.9 billion if it exercises an over-allotment option. That will be the biggest share sale in Hong Kong in nearly a decade, and about half the total raised in New York. Alibaba says it would use the proceeds to drive user engagement, improve operational efficiency and pay for continued innovation, according to the terms for the deal. More broadly, Alibaba has been trying to sustain growth at a time when the engines of China’s economy are sputtering and the country clashes with the U.S. over trade, and the funds would help Alibaba finance a costly war against homegrown rivals nipping at its heels.

2. Why Hong Kong?

A lot of reasons. Listing closer to home would fulfill a longtime goal of billionaire co-founder Jack Ma. It would make it easier for investors in mainland China to buy and sell Alibaba shares and please officials in Beijing who have watched many of the country’s largest private companies flock overseas for capital. Perhaps more importantly, a blockbuster debut by one of China’s most successful companies would show confidence in the global financial center’s future at a difficult time for the city, possibly earning Alibaba goodwill at home. Finally, selling shares in Hong Kong could help Alibaba hedge against the risk of heightening American scrutiny on Chinese firms -- including calls to force their delisting from exchanges in the U.S.

3. Is now a good time?

It’s not ideal, given the recent escalation in protest-related violence. The company dropped plans for an investor luncheon in Hong Kong and made phone calls instead. Still, the offering has been covered “multiple” times and more shares were being allocated to small investors due to strong demand. In addition, Alibaba’s U.S. stock price is up about a third this year, trading close to all-time highs. That was used as a benchmark when the Hong Kong shares were priced at HK$176 ($22.50) each on Nov. 20.

4. Why didn’t Alibaba list in Hong Kong before?

It came close in 2014, calling Hong Kong its natural first choice since most of its business is in China. But a proposal that would have allowed it to get around the exchange’s ban on dual-class shares was rejected. (Dual-class shares are often used by tech entrepreneurs to keep control of their startups after going public in the U.S.) Last year, however, rules were relaxed in Hong Kong in a step that was in part premised on China-based technology firms choosing it over the U.S. That ushered in big listings from the likes of Meituan Dianping, which provides on-demand services, and electronics giant Xiaomi Corp. In October, the Shanghai and Shenzhen exchanges revised their rules to allow mainland investors to buy dual-class shares traded in Hong Kong for the first time.

5. Is Alibaba leaving the U.S. behind?

Not at all. This would be a so-called secondary listing. In a filing with the U.S. Securities and Exchange Commission, Alibaba said the New York Stock Exchange would continue to be its primary listing venue. Having two listings on opposite ends of the globe ensures a round-the-clock venue for investors to trade its shares.

6. What does this mean for the tech industry?

Alibaba’s business has shown resilience even as archrival Tencent Holdings Ltd., the company behind social media giant WeChat, warned of a tough outlook. But competition is heating up. A successful share sale would help Alibaba pay for a costly war with Tencent and Baidu Inc. in cloud computing and entertainment, with Meituan Dianping in food delivery and travel and with everyone in terms of investing in promising startups that yield technology, talent or market share. And it could divert investor cash from those rivals.

7. Who’s driving this?

Now it’s Daniel Zhang, who took over as chairman from Ma in September. The former accountant is spearheading the company’s expansion beyond Asia and into adjacent markets, including logistics and bricks-and-mortar retail.

8. What does it mean for Hong Kong’s stock exchange?

A mega-listing and marquee name like Alibaba’s could draw investors and boost trading liquidity for Hong Kong Exchanges & Clearing Ltd., which just saw its biggest profit slump in more than three years, following a failed bid to buy its London counterpart in September. Efforts to court Alibaba emanated from the very top, with Chief Executive Carrie Lam, the city’s leader, herself lobbying Ma. Alibaba’s sale also could tempt the “next round” of Chinese tech unicorns, companies such as Didi Chuxing Inc. and ByteDance Inc., to opt for Hong Kong over the U.S. if they go public.

9. How will it work?

Alibaba aims to start trading on Nov. 26 under the code 9988, auspicious numbers in Chinese culture that connote “longstanding prosperity.” (8=prosper, 9=long). It would instantly challenge Tencent for the title of largest Hong Kong-listed corporation. Alibaba sold 500 million shares, with 50 million going to retail investors (up from an initial allocation of 12.5 million). It’s also offering a so-called greenshoe option that would allow for the sale of another 75 million shares if demand warrants.

--With assistance from Edwin Chan and Julia Fioretti.

To contact the reporters on this story: Carol Zhong in Hong Kong at yzhong71@bloomberg.net;Lulu Yilun Chen in Hong Kong at ychen447@bloomberg.net

To contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Paul Geitner, Laurence Arnold

©2019 Bloomberg L.P.