Alibaba founder Jack Ma (Reuters / Edgar Su)
On Friday morning China’s biggest online retailer Alibaba will list on the New York Stock Exchange as ‘BABA’ in what may be a record-breaking initial public offering, raising between $22-$25 billion, making it one of the world's top three tech firms.
The final Alibaba price share, expected in the range of $60-$68 per unit, will be announced at 4:00p.m. Thursday. On Friday morning the stock will start trading on the NYSE. If the price hits the top range, Alibaba may attain a market value of more than $200 billion and as much as $25 billion in stock offerings.
That would put it among the world’s three most valuable tech firms, behind Google and Facebook.
In the year's most buzzed about IPO, Alibaba will offer a total of 368 million shares to eager investors looking for a buy-in to China’s rapidly growing internet sector.
Co-founder and Executive Chairman Jack Ma will sell 12.75 million shares in the IPO, which could earn him over $800 million in a matter of seconds if prices go above $66 per share.
High demand from investors forced the company to add new shares to the deal, which could drive up the IPO price to between $22-25 billion, meaning it may even top the $22.1 billion raised by Agricultural Bank of China Ltd in 2010.
Leading up to the IPO, shares of other US e-commerce companies tumbled- Amazon’s share price dropped 5 percent and eBay fell too.
Either way, experts forecast it will be the biggest offering of any technology company, beating out giants like Google, Facebook, and Yahoo. Last year’s hot tech IPO was Twitter, which raised $1.82 billion.
All were listed on the New York Stock Exchange, which with the help of the Alibaba IPO, may have its most successful year since 2000. Already, $46 billion in capital has been raised in over 200 deals.
“To me I think Ali Baba missed this great opportunity to be listed in Hong Kong,” Jack Ma said during the Alibaba road show in Hong Kong.
The company- which has more payment transactions than both Amazon and eBay combined- will attract many foreign investors with its New York debut, however, they can’t technically own shares in Chinese internet companies, so it will all be conducted via a third party, a shell company.
China’s internet giant filed for the IPO on May 6, 2014, and the release of its Form F1 revealed the enormity of the deal, which from the financial data was set for an IPO of at least $20 billion. The document showed that Alibaba is a strong company with a strong balance sheet; net income in 2013 was $2.9 billion. In the 18 month period leading up to its public filing, Alibaba increased its active buyers to 231 million, an almost 100 million increase. Net income in the first nine months between December 2012-2013 increased 304.8 percent.
But investors may worry over stunted growth and the fact it is yuan-based; a currency that is under the control of the Chinese government whom not everyone trusts. But the company is strong, and its $6.5 billion revenue in 2013 had hedge funds hooked.
Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley, Credit Suisse Group, and Deutsche Bank are brokers for Alibaba.
Alibaba was founded in 1999.
0 comments:
Post a Comment