Alibaba sets IPO record at $168 billion
On Friday morning the stock will start trading on the NYSE after setting a record in US IPO history. Each of the 320.1 million shares was sold at $68 each which values the Chinese e-commerce giant at $167.6 billion, only third to Google and Facebook.
In the year's most buzzed about IPO, Alibaba will offer a total of 368 million shares to eager investors looking for a buy-in to China’s rapidly growing internet sector.
"#Alibaba's like the Amazon of China" is a bad comparison. It's more like the "eBay of new goods".
— Dan Colasanti (@dancolasanti) September 18, 2014
Co-founder and Executive Chairman Jack Ma will sell 12.75 million shares in the IPO, which could earn him over $800 million in a matter of seconds after the bell rings.
High demand from investors forced the company to add new shares to the deal, meaning it may even top the $22.1 billion raised by Agricultural Bank of China Ltd in 2010.
Leading up to the IPO, shares of other US e-commerce companies tumbled- Amazon’s share price dropped 5 percent and eBay fell too.
Either way, experts forecast it will be the biggest offering of any technology company, beating out giants like Google, Facebook, and Yahoo. Last year’s hot tech IPO was Twitter, which raised $1.82 billion.
— CNNMoney (@CNNMoney) September 15, 2014
All were listed on the New York Stock Exchange, which with the help of the Alibaba IPO, may have its most successful year since 2000. Already, $46 billion in capital has been raised in over 200 deals.Alibaba originally wanted to list in Hong Kong, but wasn't able.
“To me I think Ali Baba missed this great opportunity to be listed in Hong Kong,” Jack Ma said during the Alibaba road show in Hong Kong.
The company- which has more payment transactions than both Amazon and eBay combined- will attract many foreign investors with its New York debut, however, they can’t technically own shares in Chinese internet companies, so it will all be conducted via a third party, a shell company.
China’s internet giant filed for the IPO on May 6, 2014, and the release of its Form F1 revealed the enormity of the deal, which from the financial data was set for an IPO of at least $20 billion. The document showed that Alibaba is a strong company with a strong balance sheet; net income in 2013 was $2.9 billion. In the 18 month period leading up to its public filing, Alibaba increased its active buyers to 231 million, an almost 100 million increase. Net income in the first nine months between December 2012-2013 increased 304.8 percent.
But investors may worry over stunted growth and the fact it is yuan-based; a currency that is under the control of the Chinese government whom not everyone trusts. But the company is strong, and its $6.5 billion revenue in 2013 had hedge funds hooked.
Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley, Credit Suisse Group, and Deutsche Bank are brokers for Alibaba.
Alibaba was founded in 1999.