China's Alibaba embarks on U.S. IPO journey

SAN FRANCISCO Tue May 6, 2014 7:39pm EDT

Alibaba's logo is seen at its headquarters on the outskirts of Hangzhou, Zhejiang province April 23, 2014. Picture taken April 23, 2014. REUTERS/Chance Chan

Alibaba's logo is seen at its headquarters on the outskirts of Hangzhou, Zhejiang province April 23, 2014. Picture taken April 23, 2014.

Credit: Reuters/Chance Chan

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SAN FRANCISCO (Reuters) - Alibaba Holdings Inc gave investors a closer look at the scale and growth of the Chinese e-commerce juggernaut in an IPO prospectus filed Tuesday in the first step of what could become the largest technology debut in history.

Alibaba, which powers four-fifths of all online commerce conducted in the world's second-largest economy, is expected to raise upward of $15 billion and potentially surpass the $16 billion that Facebook Inc managed in 2012. It will become the largest Chinese corporation to have sought a home on U.S. exchanges

The company handled more than 1.5 trillion yuan, or about $248 billion, of transactions for 231 million active users across its three main Chinese online marketplaces in 2013, more than Amazon and eBay combined.

"If it is able to transport that kind of power to outside China, it has the potential to become a true global ecommerce powerhouse," said Roger Entner, Lead Analyst and Founder of Recon Analytics. "Everybody thought Amazon could do it but now we have to rethink Amazon in the light of being the most successful company in that field in the U.S. -- but not in the world."

Unlike many of the more prominent U.S. technology IPOs of recent years, Alibaba's list of significant shareholders is short. By contrast, Facebook and Twitter each broke out shareholdings from more than a half dozen individual principal shareholders.

Former English schoolteacher and co-founder Jack Ma now owns 8.9 percent of Alibaba. Yahoo Inc and Softbank own 22.6 percent and 34.4 percent of the company, which said on Tuesday it is still deciding between the New York stock exchange and the Nasdaq as a listing venue.

Yahoo must sell roughly 40 percent of its Alibaba stake in the IPO or sell the shares back to Alibaba directly prior to the IPO.

Yahoo and Softbank may be among the biggest beneficiaries of Alibaba's IPO, but neither will exercise much control of the Chinese company despite their shareholdings.

Under an agreement struck with those two major shareholders, Yahoo Chief Development Officer Jacqueline Reses will resign from the board upon the listing, while Softbank will have the right to nominate just one director to a new, 9-member board.

Alibaba's IPO has spurred levels of excitement in Silicon Valley and Wall Street circles unseen since Facebook Inc's record-breaking $16 billion coming-out party.

It will debut in a stock market where high-flying stocks like Twitter's and Amazon's have in past weeks been brought back to earth, in a selloff that has polarized Wall Street even as it revives doubts about soaring tech-sector valuations.

The proposed IPO size in Tuesday's filing is an estimate for the purpose of calculating exchange registration fees. Analysts expect the company to eventually raise an amount surpassing Facebook's, garnering a market value of more than $160 billion.

Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Morgan Stanley and Citigroup will underwrite the IPO.

(Reporting by Gerry Shih, Alexei Oreskovic, Sarah McBride, Deepa Seetharaman and Nicola Leske; Editing by Alden Bentley and Andrew Hay)

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Comments (3)
UauS wrote:
For Sale: The United States of America
Made in China

May 06, 2014 8:06pm EDT  --  Report as abuse
redboy wrote:
I don’t like the connotation of Alibaba(and the 40 thieves). It seems a blatant reference to stealing. Something the Chinese are good at.

May 06, 2014 9:51pm EDT  --  Report as abuse
divinargant wrote:
You know…there is just something really wrong with this IPO and the lack of info on this mega monster outfit. I get this felling that something is going to go really wrong here. Just on principal alone it doesn’t fit in and should have landed in Hong Kong instead. Then again when did principals ever really matter in this entity anyway. Just got this feeling………..

May 06, 2014 12:02am EDT  --  Report as abuse
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