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Alibaba files for likely world’s biggest IPO

2014-05-08 13:34 Global Times Web Editor: Qin Dexing

Chinese e-commerce juggernaut Alibaba Group Holding filed the prospectus to the US securities regulatory body early Wednesday Beijing time, paving the way for a massive initial public offering (IPO) that could be the biggest technology debut in history.

Founded 15 years ago by Jack Ma Yun, Alibaba rode the boom in China's Internet service industry over the past decade to become the world's largest online and mobile commerce company in 2013 by monetary value of transactions handled, the prospectus said.

The company's three online marketplaces - flagship taobao.com, brand product retailer platform tmall.com and group sales site Juhuasuan - handled more than 1.54 trillion yuan ($247 billion) in transactions by 231 million active users and 8 million active sellers in 2013, according to the prospectus filed to the US Securities Exchange Commission Tuesday local time.

In the prospectus, Alibaba proposed a $1 billion IPO, but analysts said it represented a placeholder used to calculate registration fees and will most likely be higher.

The company did not disclose how many shares it will sell or the estimated price per share, which will be unveiled in an updated prospectus shortly ahead of the IPO.

ChinaVenture Investment Consulting analyst Li Ling told the Global Times on Wednesday that Alibaba will likely seek about $20 billion, in line with the amount that the company reportedly planned to seek in Hong Kong before it turned to the US.

Analysts' estimations of Alibaba's share sales range from $15 billion to $25 billion, meaning that the e-commerce giant's debut may surpass Facebook's $16 billion listing in 2012 to become the largest technology IPO in world history.

Alibaba's market value is estimated at $168 billion, bigger than 95 percent of Standard & Poor's 500 Index, Bloomberg reported Wednesday. The Wall Street Journal, citing analysts in a report published Wednesday, said that the company's market value could fall between $136 billion to $245 billion when it sells shares.

According to the prospectus, Alibaba made 40.47 billion yuan ($6.49 billion) revenue in the last nine months of 2013, up 56.6 percent from 2012.

The company made a net profit of 17.74 billion yuan in the nine months ending December 2013, more than four times the 4.38 billion yuan net income earned in 2012.

Alibaba has four significant shareholders: The biggest is SoftBank, owning 34.4 percent, followed by Yahoo at 22.6 percent. Alibaba executive chairman Ma owns 8.9 percent, and executive vice chairman Joseph Tsai has 3.6 percent.

In an e-mail reportedly sent to employees before filing, Ma said, "Alibaba will face an unprecedented challenge and pressure in the international capital market because of the scale (of the IPO), expectations, national boundaries, cultural conflicts and regional politics."

The company has not yet decided whether to list on the New York Stock Exchange or NASDAQ.

One of the risk factors the company highlighted is the possibility of being sued over listing knockoffs or pirated products of trademarked or copyrighted material on its marketplaces.

Alibaba has failed to eradicate counterfeiting from taobao.com, said Feng Lin, a senior analyst at China E-Commerce Research Center, although it has tried for years.

"The company's biggest challenge to seeking a high valuation will be figuring out effective measures to clear the fake products from its marketplaces," Feng told the Global Times. "As a Chinese newcomer to the US stock market, Alibaba cannot bear the harm to its reputation of being sued by intellectual property holders."

Li said Alibaba's IPO if successful will attract more US investors to bet on a slew of Chinese technology companies offering services from job hunting to car information that have flooded to list in the US in the last year.

Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Citigroup Inc will underwrite the IPO.

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