(Bloomberg) — Alibaba Group Holding Ltd. registered one billion additional American depositary shares, suggesting to some analysts that SoftBank Group Corp. may intend to sell part of its stake in the Chinese e-commerce giant.
The share registration, disclosed in a U.S. regulatory filing on Friday, contributed to a 4.5% slump in Alibaba’s stock in Hong Kong on Monday, the biggest drop in the benchmark Hang Seng Index.
SoftBank invested in Alibaba before the company’s initial public offering, meaning a large portion of its holdings weren’t registered as ADSs, Citigroup Inc. analysts including Alicia Yap wrote in a note. Registering the shares gives holders more flexibility to sell, the analysts wrote. It may also cover Alibaba’s need to issue new shares for its employee equity incentive plan.
SoftBank owns 5.39 billion ordinary shares of Alibaba, equivalent to 673.76 million ADSs, or a 24.8% stake, according to Citigroup calculations. Alibaba registered about 2 billion ADSs when the company conducted its IPO in the U.S. in 2014.
Masayoshi Son’s SoftBank has come under pressure in recent months as a selloff in technology stocks dragged down the value of portfolio companies including Didi Global Inc., One 97 Communications Ltd. and DoorDash Inc. SoftBank’s shares have tumbled about 50% from their peak last year.
The Japanese company, which reports earnings Tuesday, has used buybacks in the past to bolster its own stock. Alibaba is by far its most valuable holding.
A spokesperson for SoftBank declined to comment. Its shares rose 2.6% in Tokyo on Monday.
(Updates trading prices in third paragraph.)
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