Alibaba sets price range, hopes to raise record-breaking $24.3 billion
Alibaba Group Holding has set the price range for its initial public offering between $60 and $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, although many IPO analysts estimate that the company is worth more than $200 billion.
Now that the range is set, Alibaba can pitch the deal to investors. It’s during the so-called “road show” following the pricing that big investors say how many shares they want and what price they’ll pay.
The final price will be nailed down the day before the company’s first day of trading, expected soon, and could fall outside the price range depending on investor demand.
Alibaba is expected to go public in about two weeks. It 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.”
The Hangzhou company has been on a tear, last month reporting a surge in mobile growth and big financial gains in the quarter 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 and 136 million in December.
Despite the unknowns, the prospect of a blockbuster Alibaba IPO has ignited the kind of frenzied investor interest that inflamed Facebook in 2012 and Twitter in 2013.
The IPO is seen as a coming-out party of sorts for China’s booming Internet sector, and investors have been excited to get a piece of the action.
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 about a quarter of the company.
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