Alibaba executive chairman Jack Ma is the man with Midas touch. Just lending his name could turn a company into a free-money factory. Shares of Hong Kong-listed investment firm Reorient Group never traded above HK$5. But the stock of Reorient skyrocketed more than 177% to HK$24.50 on Monday after it disclosed the names of its newest investors over the weekend.
Alibaba founder makes HK$4 billion in a day
Over the weekend, Reorient announced that it sold 1.9 billion shares for HK$3.89 billion to a group of five investors led by Yunfeng Financial Holdings. Yunfeng is a Cayman Islands-based personal wealth fund of Alibaba founder Jack Ma. Yunfeng purchased 1.34 billion new shares for HK$2.68 billion ($346 million), according to Bloomberg. It will have 56% stake in the Hong Kong-listed company.
The 177% jump in Reorient’s stock price made Alibaba founder HK$4 billion in paper profit in just a day. According to the South China Morning Post, a whopping 29.5 million shares of Reorient had changed hands by 11:10 AM (local time) on Monday. That’s a significant jump from the five-day average of 4.8 million shares. Other investors included Huang Youlong and Shi Yuzhu.
Reorient may make strategic acquisitions
Reorient Group said it would use the funds as general working capital and to support the development of financial services. It may also make strategic acquisitions, including Internet financial businesses. Yunfeng said it was a strategic investment, in line with its endeavor in the financial technology space.
In April, when Alibaba moved its pharmacy business to its Hong Kong-listed unit Alibaba Health Information Technology, prompting a significant spike in its stock price. The Hangzhou-based e-commerce giant has made a number of strategic investments to broaden its financial horizon. It has launched an online bank called MYBank. Alibaba also operates a credit-scoring service and a money-market fund.
Alibaba shares rose 1.03% to $90.24 at 10:38 AM EDT on Monday. However, the stock is still down 14% year-to-date.