Alibaba Group Holding Ltd (阿里巴巴) plans to boost the price of its initial public offering (IPO) amid strong investor demand, people with knowledge of the matter said, potentially making it the biggest in history.
China’s biggest e-commerce company plans to increase the top end of a marketed range for the sale to above US$70, from between US$60 and US$66 previously, the people said, asking not to be identified discussing private information. At US$70, Alibaba’s sale would raise US$22.4 billion, surpassing Agricultural Bank of China Ltd’s US$22.1 billion offering in 2010 as the biggest ever.
Alibaba’s decision came even as billionaire founder Jack Ma (馬雲) told prospective investors yesterday at Hong Kong’s Ritz-Carlton hotel he would not price the initial public offering too aggressively, according to two people who attended the meeting.
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Ma said the company tried to fairly price the November 2007 sale of its business-to-business marketplace Alibaba.com Ltd, which almost tripled on its Hong Kong debut, the people said.
“There was so much demand in the first two days, it’s reasonable to raise the price range slightly,” Hong Kong-based Arete Research Service LLP analyst Li Muzhi said. “The company might want to not be too aggressive on pricing so it can still have some upside after the listing.’’
The company is embarking on the second week of its global tour to meet with investors in Asia and Europe as it seeks to convince funds to buy into its offering. Alibaba had already received enough interest for its deal that it plans to stop taking orders for the sale early, people with knowledge of the matter said last week.
Alibaba and its advisers sifted through the orders over the past few days and determined that there was enough demand at the high end of the range that they could raise it, the people said yesterday. They plan to announce the new price range as early as today, they said.
Hong Kong-based Alibaba spokeswoman Florence Shih (施致瑀) declined to comment.
Over a lunch yesterday of smoked salmon, breaded chicken and mango pudding, Ma fielded investors’ questions on the company’s partnership structure, management philosophy and how it will maintain profit margins amid rising competition, people who attended the meeting said.
Alibaba aims to be a global company and plans to expand its business in Europe, the US and Asia, Ma told reporters before the investor luncheon.
For US-based investors, final orders will need to be in by 4pm today, while Alibaba will stop taking orders in Asia and Europe during their respective afternoons tomorrow, people said last week. Alibaba still plans to set a final price for the shares on Thursday, with trading to begin the next day, one of the people said.
Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc, JPMorgan Chase & Co, Morgan Stanley and Citigroup Inc are managing the offering. Rothschild is serving as an independent IPO adviser to Alibaba. The company plans to list its shares on the New York Stock Exchange.
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