Chinese Internet giant Alibaba aiming for $24.3-billion IPO
Alibaba Group Holding has set the price range of its initial public stock offering $60 to $66 a share and hopes to raise a record-shattering $24.3 billion in what would be the biggest IPO ever.
At $66 a share, the Chinese Internet behemoth would be valued at about $163 billion.
“It was very close to what I expected,” said Francis Gaskins, director of research for Equities.com in Marina del Rey. “At that price range, it’ll do very well.”
Alibaba can now begin pitching the deal to investors; its so-called road show is expected to begin Monday in Asia. It’s during the road show that institutional investors request the number of shares they want and say what price they’ll pay.
Over the next couple of weeks, bankers for Alibaba “have their work cut out for them,” Gaskins said.
“They have to really get out and sell it now because it’s so big; that’s a lot of stock to place,” he said. Still, “all the institutional investors in the U.S. are going to want to look at it.”
The final price will be nailed down the day before the company’s first day of trading, and could fall outside the current range depending on investor demand. Some IPO experts believe the market value of Alibaba is closer to $200 billion.
Alibaba said in its filing with the U.S. Securities and Exchange Commission on Friday that it expects to offer 320.1 million American depositary shares.
Alibaba is expected to go public in about two weeks; research firm PrivCo is predicting the first day of trading will be Sept. 18. The company filed in May to sell shares in the U.S. and has disclosed that it would list on the New York Stock Exchange under the ticker symbol BABA.
Alibaba’s IPO is set to dwarf that of Facebook Inc. When the world’s largest social network went public in May 2012, it raised $16 billion at a market value of $104 billion.
The Hangzhou company has been on a tear, last month reporting a surge in mobile growth and big financial gains in the quarter that ended June 30.
The company — which handles more sales than Amazon.com Inc. and EBay Inc. combined — said profit nearly tripled to $2 billion, or 84 cents a share, from a year earlier. Revenue rose 46% to $2.54 billion.
Active online buyers increased to 279 million, Alibaba said, 51% higher than the year-earlier quarter and a 9% gain from the January-through-March quarter.
Alibaba is particularly strong in mobile. The company revealed that 32.8% of its gross merchandise volume was transacted via mobile devices, up from just 12% a year earlier. And it more than doubled its mobile revenue from the previous quarter.
The number of mobile users has also soared: Alibaba said it had 188 million mobile monthly active users in June, up from 163 million in March.
The prospect of a blockbuster Alibaba IPO has ignited the kind of frenzied investor interest that inflamed Facebook in 2012 and Twitter in 2013.
Alibaba is often compared with EBay and PayPal, but its interests are much wider. They include banking, maps, cloud computing, an online music service, and TV and film production.
It operates Taobao, Alibaba’s biggest website and China’s largest consumer-to-consumer online shopping platform, and Tmall, China’s largest third-party platform for brands and retailers. The company also has a stake in microblogging platform Weibo, which itself went public in the U.S. this year.
Alibaba was founded in 1999 by a group of 18 people, led by Jack Ma, a former English teacher from Hangzhou, a city near Shanghai. Yahoo Inc. was an early investor and owns 22.6% of the company.
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