Alibaba Group Holding Ltd (阿里巴巴) is seeking to raise more than US$21 billion in an initial public offering (IPO) that would value the Chinese e-commerce giant at about US$163 billion and rank as the largest-ever technology debut in the US.
Alibaba expects to price its initial public offering between US$60 and US$66 per American depositary share, valuing the company at about US$162.69 billion at the top end of the range and raising a maximum of US$21.1 billion.
The company founded by Jack Ma (馬雲) is set to decide on its final price after a globe-spanning roadshow that is due to start in New York tomorrow, and is expected to stop in cities from Hong Kong to San Francisco.
If all goes well, Alibaba might ring the opening bell on the New York Stock Exchange in as little as two weeks.
Industry analysts had expected Alibaba to try for a valuation in excess of US$200 billion, ranking the Chinese company among the 20 largest publicly traded companies in the US. It might eventually price above the initial range, should it deem investor demand sufficient.
Many investors are eager to buy a piece of a Chinese company that handles more e-commerce than Amazon.com Inc and eBay Inc combined.
“This number may seem enormous, but when you look at the value compared with the company’s fundamentals, it’s not as rich as we might expect,” Sageworks chairman Brian Hamilton said.
However, some investors remain cautious about the potential conflicts of interest between Ma’s role as a steward of the company, and his investment interests elsewhere.
The company has also attracted controversy in the past, such as when it hived off lucrative payments unit Alipay.com Co (支付寶), triggering objections from major shareholders Yahoo Inc and Softbank Corp.
The company said in its latest prospectus that it has racked up almost US$16 million in IPO-related legal fees, unusually high for an IPO and an indication of the effort that Alibaba and its advisers have undertaken to prepare a complicated prospectus.
“When an Internet company of our scale that originated from China enters the global scene, you should expect that it will encounter skepticism from different directions due to differences in cultural perspectives, values and even geopolitical positioning,” Ma said in a letter to investors reminiscent of the “founder’s letters” that accompanied the debuts of Facebook Inc and Google Inc.
“While it may be difficult for a public Alibaba to sidestep controversy, we hope that controversies generate constructive debate and add fresh perspectives to the dialogue on globalization,” he added.
Some investors say the company’s fundamentals outweigh the risk of investing in a company with an unfamiliar governance structure.
Alibaba accounts for about 80 percent of all online retail sales in China, where rising Internet usage and an expanding middle class helped the company generate gross merchandise volume of US$296 billion in the 12 months ended June 30.
Alibaba’s revenue accelerated in the April-to-June quarter on strong gains in its mobile business, providing investors with what might be the final glimpse of the company’s financials before its expected landmark market debut.
Revenue in the June quarter increased 46 percent year-on-year to US$2.54 billion, a faster pace than the 38.7 percent growth seen in the previous quarter.
Alibaba is selling 123.1 million of the 320.1 million American depositary shares slated for the IPO. Shareholders including Yahoo, Ma and executive vice chairman Joe Tsai (蔡崇信) are offering the remainder.
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