Alibaba Group Holding Ltd's finance affiliate is considering an initial public offering in Hong Kong in the first half of next year, after running into regulatory hurdles for a dual listing that would have included Shanghai, according to people familiar with the matter.

Chinese mainland's restrictions on stock options are discouraging Zhejiang Ant Small & Micro Financial Services Group Co from its original plans for the dual listing, said the people, asking not to be named because the matter is private.

A Shanghai IPO hasn't been completely ruled out yet and the company could consider a mainland offering later.