TMCnet News
Investors line up for Alibaba's $22bn stock market debut: $68 share price makes firm worth more than Amazon: Founder set to become China's richest man(Guardian (UK) Via Acquire Media NewsEdge) A former university lecturer who started an internet venture in his one-bedroom flat was poised to be confirmed as China's richest man last night as his company Alibaba prepared for the world's biggest stock market flotation. Jack Ma, 50, still owns 9% of the online commerce group he started 15 years ago. The company priced its shares at $68 last night, valuing the company at $167.6bn - bigger than Amazon and more than double the value of eBay. Alibaba Group Holding will be listed under the ticker BABA when the share sale, which is expected to raise $22bn, begins in New York today after a two-week global roadshow that has resulted in frenzied interest from investors eager to buy into the rapid growth of China's internet sector. Alibaba controls nearly 80% of all e-commerce in China, although Ma, known for stunts such as dressing as Lady Gaga, hinted last week at ambitions that go beyond the country's borders. "We hope to become a global company so, after we go public in the US, we will expand strongly in Europe and America," he told reporters in Hong Kong during his global tour to meet investors. "At the same time we won't abandon Asia because, after all, we're not a company from China, we are an internet company that happens to be in China." The float has aroused controversy, particularly with early investors avoiding the "lockup" that usually keeps them from selling off shares in big flotations. While Ma is set to sell 12.7m shares, other investors not identified in Alibaba's filings hold $8bn of shares that could also be sold. The number of shares represents about a third of what could be sold in the deal and is highly unusual. When Facebook - the last record-breaking tech IPO - went public in 2012 investors were not allowed to sell pre-IPO shares. The float has also been marred by questions of accounting. Alibaba has been aggressively acquisitive and some analysts have questioned the rigour of its analysis of companies before buying. Last month the company announced it had found issues at ChinaVision Media Group, a film company it bought in March. So far none of these issues seem to have dampened investor enthusiasm. Ma and his advisers have been carefully studying the Facebook IPO in the hope of avoiding the pitfalls that befell that share sale. Despite massive appetite, Facebook's IPO proved a disaster. The Nasdaq exchange failed to keep up with demand, marring the debut, and investor worries about the social media's mobile business led to a slump in Facebook's share price that took a year to erase. Appetite for Alibaba's deal is, if anything, keener than for Facebook and analysts expect the stock to soar today. PrivCo, the analyst that correctly predicted Facebook's IPO flop, calculates Alibaba is worth $100 a share - valuing the company at $240bn, $40bn more than Facebook. James Gellert, chief executive of analyst Rapid Ratings, said the IPO would set the stage for the full emergence of a new tech powerhouse. "Alibaba already is by many measures a global company and will soon be very much more so." He said the share sale would give Alibaba "a boatload of cash" to invest in growth. Alibaba already has $8bn in cash on its books and looks set to add a further $10bn from the IPO. Alibaba plans to expand its business in the US and Europe, where it is not widely known, after the deal. A recent US poll found that 88% of respondents had not heard of the company. "Investors are looking at this business both as it is today and at its future potential. Today it's a stunningly large company in the largest market with the largest growth potential. In five years I think we'll look back at this and see a strong story of international growth," Gellert said. Potential investors are enticed by Alibaba's surging growth. Its revenue increased 46%, to $2.54bn, during the quarter that ended in June. And by 39% in the three months before that, the company's revenue surged 39 percent, posting its slowest rate in six years. Top five flotations: Agricultural Bank of China raised $22.1bn (pounds 13.5bn) in July 2010, valuing the Chinese bank at $133bn Industrial and Commercial Bank of China raised $21.9bn in 2006, valuing the company at $131.8bn Bank of China raised $11.2bn in 2006 valuing the company at $94.1bn Facebook raised $16bn in 2012, valuing the company at $81bn Electricite de France raised $9bn in Paris in 2005, valuing it at $72bn Source: Dealogic (c) 2014 Guardian Newspapers Limited. |