Ali Baba finally to reveal its size in US USD1Bil IPO
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Chinese Internet giant Alibaba Group Holding Ltd officially filed plans to offer its shares in the US, saying it plans to raise $US1 billion ($A1.078bn) through the placement.
The filing confirms the breadth and scale of China’s e-commerce behemoth ahead of what is expected to be one of the largest stock listings in history.
The filing showed the company had 231 million annual active buyers last year. A total of $US248 billion was spent on Alibaba’s three shopping sites last year, roughly the same as the economy of Finland.
That transaction volume, which in the fourth quarter was up 53 per cent from the prior year, was more than twice as much as was spent on Amazon.com Inc, which had roughly $US110 billion in transactions, according to Forrester Research.
The filing shows that Alibaba’s largest business segment was its three Chinese retail markets, contributing 83 per cent of its $US6.5 billion in revenue in the nine months ending in December.
The filing, released after the market closed, marks the first step toward a whirlwind sale season in which Wall Street will pitch the stock offering. Alibaba has lined up half dozen of the world’s biggest banks to help place its shares, and money managers and small investors are expected to size up the company, which is familiar to many in the Western world more by reputation than firsthand experience.
The company did not say on which stock exchange it plans to list, though it is expected to choose the New York Stock Exchange. The launch of the deal is still months away.
What the filing didn’t give was a sense of what valuation the company will seek when it sells shares. Analyst estimates have ranged from $US136 billion to $US245 billion.
Alibaba said it plans to raise $US1 billion, although that figure is widely seen as a placeholder. People familiar with the company have said it could raise more than $US20 billion in the deal, not expected until at least later in summer.
Until now, estimates of Alibaba’s value have been mostly guesswork based on comparable companies. Alibaba had only disclosed some bare-bones financial information via filings of Yahoo Inc, the holder of a 24 per cent stake.
In the year ended March 31, 2013, Alibaba had earnings of $US1.35 billion on revenue of $US5.55 billion.
The Chinese company had $US7.9 billion in cash, cash equivalents and short term investments, and $US4.9 billion in total long-term debt as of the end of last year–important metrics as Alibaba continues an acquisition spree aimed at taking the company into new business areas and bolstering its hand against rivals.
The IPO will mark the growing ambitions in China and abroad of Alibaba, which was founded in 1999 in the eastern city of Hangzhou, by a former English teacher named Jack Ma. Alibaba’s first business was a site to connect Chinese suppliers with Western buyers.
Today, Alibaba’s main business are its two consumer marketplaces, Taobao and Tmall. The two sites together account for roughly 80 per cent of all Chinese online shopping transactions, which stood at 1.84 trillion yuan ($US296 billion) last year according to research firm iResearch.
Alibaba’s listing also represents a huge opportunity for the world’s biggest banks. Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Morgan Stanley are the lead underwriters, along with Citigroup Inc.
The banks are expected to split a base fee of about 1% of the proceeds, with another 1 percentage point of the proceeds set aside as incentive fees, people familiar with the deal have said.