Alibaba Group finally filed with the U.S. Securities and Exchange Commission to go public in the U.S. to raise up to $1 billion of funding. The amount is considered a placeholder number which will facilitate the calculation of exchange registration fees. Analysts expects this IPO to break Facebook’s record of $16.4 billion and marking one of the biggest IPOs in American history, according to a recent poll by Bloomberg News, who valued the company at nearly $170 billion.
Founded by former English teacher Jack Ma in 1999, Alibaba has a mix of businesses, ranging from retail markets of Taobao, Tmall, Juhuasuan to global wholesale marketplaces of Alibaba.com and 1688.com, as well as global consumer market AliExpress and cloud computing services. Alibaba also runs China’s largest payment processor Alipay, which is not part of this IPO. But it is reported that Alibaba Group is in talks with major shareholders to regain a stake in the payment affiliate.
In the nine months ended December 31, 2013, Alibaba generated 40.5 billion yuan ($6.5 billion) of revenue and net income of 17.7 billion yuan ($2.9 billion), according to the prospectus. Alibaba’s revenue mainly comes from merchants through online marketing services, commissions on transactions and fees for online services. Other sources of revenue are fees from memberships and cloud computing services.
According to the prospectus, Jack Ma hold a 8.9% stake and Softbank owns a 34.4% stake in the company. Yahoo, once the largest shareholder of Alibaba, had owned up to 40% stake in the company for a $1 billion investment in 2005. Alibaba stated to buy back its stake held by Yahoo since 2011 and the latter now owned a 22.6% stake in Alibaba.
Alibaba’s submission of registration documents finally settled the buzz for the much-anticipated IPO of the Chinese e-commerce juggernaut. Alibaba once listed its B2B business on Hong Kong Stock Exchange (HKSE) in 2007 for HK$ 11.6 billion, but the performance of the stock failed expectations thereafter. Alibaba then launched a privatization bid of nearly HK$19 billion and got delisted from HKSE in June 2012, seeking for an overall listing of the group by integrating B2B and C2B businesses.
Alibaba wavered between Hong Kong and the U.S. market for a long time and rumors regarding the matter ensued. The company finally settled on launching IPO in the U.S. market in May this year, among many factors, one reason that drive Alibaba to choose U.S. market is HKSE does not support dual-class stock structure.
image credit: Alibaba