Grey market expectations for Alibaba market cap hit $250 bln-IG Group

HONG KONG, March 20 Thu Mar 20, 2014 2:53am EDT

HONG KONG, March 20 (Reuters) - Even before Alibaba Group Holding Ltd kicks off its first underwriter meeting for its planned U.S. IPO, traders are pouncing on the deal, betting the valuation of the Chinese e-commerce giant may leap to around $250 billion by the debut, according to IG Group.

The Hangzhou, China-based group is preparing for an initial public offering that could be the world's biggest technology listing, exceeding Facebook Inc's $16 billion offer two years back.

In terms of the total market worth, a Reuters survey of 12 brokers gave Alibaba a value of $141 billion, based on the average call. Australian investment bank Macquarie Group estimated a top end value of $200 billion.

IG, the London-listed financial spread betting firm, is offering a grey market where traders can actually bet where they expect Alibaba's market value could be at the close of the first trading day. IG said it only had buy orders from clients, which pushed expectations for Alibaba's market cap to around $250 billion.

"Whether or not this level of heightened expectation can be sustained, needless to say, remains to be seen," Brenda Kelly, chief market strategist at IG, said in a statement.

At that value, Alibaba would emerge as the world's 10th-biggest company by market value, ahead of Wal-Mart Stores Inc's $242 billion, according to Thomson Reuters data.

An IPO of Alibaba - which works like a combination of eBay Inc and Amazon.com - is expected sometime in the third quarter.

The company said on Sunday it has started the process for a U.S. IPO, with a formal kick-off meeting involving bankers, lawyers and accountants scheduled for March 25.

"The IPO is set to be one of the largest on record and the hype associated with it will more likely rival that of the Twitter and Facebook and should provide a large boon to Alibaba investors Yahoo and Softbank Corp," Kelly added.

Softbank owns 37 percent of Alibaba, while Yahoo owns 24 percent.

Alibaba earned $792 million net income in the July-September quarter, compared with a loss a year earlier. Revenue grew 51 percent in the same quarter to $1.78 billion. (Reporting by Denny Thomas and Elzio Barreto; Editing by Michael Flaherty and Ryan Woo)

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