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Tue, Oct 23, 2007 - Page 10 News List

Alibaba raises share prices before IPO

'A GREAT COMBINATION' Orders for shares in the Chinese Internet company from investors exceeded supply within an hour after it began taking applications


Alibaba.com Ltd (阿里巴巴) will raise as much as HK$11.6 billion (US$1.5 billion) after increasing the price of stock in the biggest initial public offering (IPO) by a Chinese Internet company, sources familiar with the matter said.

The operator of China's largest trading Web site for companies and parent Alibaba.com Corp will sell shares for HK$12 to HK$13.50 apiece in Hong Kong, about 13 percent more than the initial range marketed to investors, the sources said, declining to be identified before a public statement is made.

Orders for shares from institutional investors exceeded supply within an hour after Alibaba started taking applications, the sources said.

Alibaba lured buyers to the IPO in Hong Kong, where the benchmark Hang Seng Index has gained 44 percent this year, with a forecast for profit to almost triple this year, as more Chinese companies buy and sell products over the Internet.

"China and Internet are a great combination," said Wong Soon-tong, who helps manage US$3 billion at UOB Asset Management in Singapore. "There is a lot of interest in China and in Internet stocks right now."

Wong said UOB could subscribe to Alibaba shares.

The company and parent Alibaba.com Corp plan to sell a combined 858.9 million shares, or a 17 percent stake, a document distributed to international institutions on Oct. 15 said. The shares were initially marketed at HK$10 to HK$12.

Cisco Systems Inc, the world's largest maker of computer networking equipment, will buy US$20 million in shares in the IPO, the people said. Yahoo Inc, owner of the most-visited US Web site, is purchasing US$100 million of Alibaba shares, a document said.

Foxconn (Far East) Ltd (富士康) will acquire US$35 million in Alibaba.com Ltd shares in the IPO, the sources said. Foxconn is a unit of Hon Hai Precision Industry Co (鴻海精密). This brings the total amount of shares reserved for corporate investors to almost US$300 million.

Deutsche Bank AG, Goldman Sachs Group Inc and Morgan Stanley are arranging the sale. Alibaba spokeswoman Christina Splinder declined to comment, as did spokespeople for the three investment banks.

In its share sale document, Hangzhou-based Alibaba forecast profit of at least 622 million yuan (US$83 million) this year, up from 219.9 million yuan last year.

Sunnyvale, California-based Yahoo owns a 39 percent stake in Alibaba.com Corp after swapping US$1 billion and its China unit for the holding in 2005. Softbank Corp, Japan's third-biggest mobile-phone carrier, owns a 29.3 percent stake in Alibaba.

At the high end of the new price range the company would be valued at US$8.8 billion, or 54 times the estimated profit for next year before stock-based compensation, the sources said.

The price-earnings multiple will rise to as much as 66 times after such expenses are deducted, the sources said.

Alibaba shares are scheduled to be priced on Saturday and begin trading on the Hong Kong stock exchange on Nov. 6.

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