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China's Alibaba files for IPO in US

E-commerce firm's long-awaited move could surpass $16bn that Facebook and its early investors raised two years ago.

Last updated: 07 May 2014 17:32
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Alibaba Group, the biggest e-commerce company in China, is offering a deal that could turn into one of the biggest IPOs in history.

In a long-awaited move on Tuesday, Alibaba filed for an initial public offering of stock in the US that could surpass the $16bn that Facebook and its early investors raised in the social networking company's IPO two years ago.

Alibaba's paperwork says it will raise at least $1bn, but finance professionals believe that is a notional figure to get the IPO process rolling and say that the company's ambitions for the share sale are much richer.

Although it is not well-known in the US, Alibaba is an e-commerce powerhouse that makes more money than Amazon.com Inc and eBay Inc combined.

It has helped drive the rise of e-commerce in China, a transformation that has given millions of households greater access to clothes, books and consumer electronics in a society that in the 1980s still required ration tickets for some supermarket items.

Shopping online has become even more popular as smartphones give more Chinese easy access to a computer.

Alibaba's launch of an online payment system, Alipay, filled the gap for the shoppers who lacked credit cards.

Still growing at an explosive rate, online shopping is forecast by consulting firm McKinsey to triple from 2011 levels to $400bn a year by 2015.

Alibaba is also expanding at a rapid clip as its network of online services, including Taobao, Tmall and Alipay mine a Chinese internet market that already has 618 million web surfers, roughly twice the size of the US population.

Online shopping bazaar

Most of Alibaba is currently owned by four shareholders: Japan's SoftBank Corp, with a 34 percent stake; Yahoo, with 23 percent; former CEO and co-founder Jack Ma with 8.9 percent; and vice chairman and co-founder Joseph Tsai with 3.6 percent.

Taobao is an online shopping bazaar similar to eBay while Tmall serves as an online outlet for brands sold by major retailers.

Last year, 231 million customers bought $248bn in merchandise on Alibaba's e-commerce sites, according to the IPO documents.

About $37bn, or 15 percent, of that was through mobile devices.

For now, Alibaba is not specifying how much stock will be sold in the IPO, or setting a price range or saying which US exchange its stock will trade on.

Those details will emerge as the IPO progresses.

The process is likely to take three to four months before Alibaba's shares begin trading.

One of the reasons Alibaba may set a new IPO fund-raising bar is because one of its major shareholders, Yahoo Inc, is supposed to sell about 208 million shares, too.

Credit and debit card processor Visa Inc holds the record for the richest IPO in the US at nearly $18bn.

State-owned Agricultural Bank of China's IPO in 2010 on exchanges in Hong Kong and Shanghai is the world's biggest at $22bn in final proceeds.

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Source:
AP
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