The expected Alibaba flotation plan in the United States has been announced by China’s major e-commerce company. In a public announcement, the firm said the US Alibaba flotation will speed up its aim of becoming a global enterprise.
Analysts, who have been predicting the move for a long time, say it will be the largest tech company share offering since the flotation of Facebook in 2012. Up to $15 billion is expected to be raised by the listing.
Analysts have been speculating since last September that an Alibaba flotation in the New York Stock Exchange is imminent after talks with Hong Kong regulators broke down. Hong Kong listing regulations do not allow senior executives to retain control of the board of directors, something the Alibaba Group Holding Ltd. is not willing to change in its management structure.
Update, June 27, 2014: Alibaba has picked the New York Stock Exchange for its IPO. It will be listed under the symbol “BABA”, which in Chinese means “eight eight”. In China, eight is a lucky number. Trading could start as early as August.
Hong Kong should change its rules, says head
Within hours of the Alibaba flotation plan in the US announcement, the head of the Hong Kong stock exchange, Charles Li, urged regulators to consider changing the rules to accommodate new listings.
The Wall Street Journal quoted Li, who said “Insisting on your principle is never without cost. But we have to continue to innovate and dare to have the courage to reform, have the courage to do what is right, and to the extent we need to make the changes to anything we will do it.”
Nobody yet knows on which exchange rate in the US the IPO (initial share offering) will occur.
Yahoo’s investment boost expected
Yahoo, which initially bought shares in the company in 2005, now has a 24% stake in Alibaba and is expected to see a significant increase in the value of its investment, as is Japan’s Softbank, which controls 37%.
Alibaba added that it would eventually like to extend its public status in the China capital market.
“Alibaba Group has decided to commence the process of an initial public offering in the United States. This will make us a more global company and enhance the company’s transparency, as well as allow the company to continue to pursue our long-term vision and ideals.
“Should circumstances permit in the future, we will be constructive toward extending our public status in the China capital market in order to share our growth with the people of China.”
“We wish to thank those in Hong Kong who have supported Alibaba Group. We respect the viewpoints and policies of Hong Kong and will continue to pay close attention to and support the process of innovation and development of Hong Kong.”
Alibaba, the world’s largest online retailer
Alibaba has over 500 million customers and 800 million product listings. It is the largest online retailer in the world. The company delivers more goods than Amazon and eBay combined. However, outside China it is not very well known.
Alibaba does not report its finances. Yahoo said that for the quarter ending in September 2013 its revenue grew 51% compared to the same quarter in 2012 to $1.8 billion.
The Alibaba flotation announcement is a welcome boost to the US IPO business, which has been losing out to foreign competition.
Two days ago, Weibo, China’s tweeting tech giant, announced it is planning for a $500 million listing in the United States.