Sept. 5 (Bloomberg) — Alibaba Group Holding Ltd., the e- commerce company whose fortunes surged along with China’s economy, is seeking a valuation of as much as $162.7 billion, larger than 95 percent of the Standard & Poor’s 500 Index, as it enters the final stages of an initial public offering.
The company may raise as much as $21.1 billion, according to a regulatory filing today, the biggest U.S. IPO ever. At the high end of the proposed price range, Alibaba would be the third most valuable Internet company traded in the U.S. after Google Inc. and Facebook Inc.
[Amazon.com Inc., No. 1 in the Internet Retailer Top 500, is valued today at $160.2 billion and eBay Inc. at $68.1 billion.—Internet Retailer]
After today’s filing, Alibaba will officially begin its roadshow, during which China’s largest e-commerce business and its advisers will start marketing the deal to investors. The company has garnered years of attention for its scale — with 279 million active buyers in the year through June — and its exposure to a growing Internet consumer base in China.
While the IPO is coming amid buoyant Chinese e-commerce growth, investors now must weigh the risks of buying shares in Hangzhou-based Alibaba. The Internet behemoth, whose marketplaces are comparable to both eBay Inc.’s and Amazon.com Inc.’s, has a governance arrangement that keeps insiders in control as well as an ownership structure that could face objections from the Chinese government.
Ma Selling
Alibaba and selling stockholders—including Yahoo! Inc., which owns more than 22 percent of the company, Chairman Jack Ma and Vice Chairman Joe Tsai—plan to sell 320.1 million American depositary shares for $60 to $66 apiece, the filing shows. The stock will be listed on the New York Stock Exchange under the symbol BABA.
The final size of the offering will be determined after the presentations to potential investors. Alibaba currently plans to set a price for the shares on Sept. 18, with trading to start the next day, people familiar with the situation have said.
Alibaba provides various marketplaces for buyers and sellers as well as services that help them conduct their businesses. Taobao Marketplace, started in 2003, enables millions of individuals and small businesses to sell products, while Tmall.com provides a virtual shopping mall, with retailers and brands offering products, and Juhuasuan operates a flash- sales model.
Governance Structure
Those three sites accounted for 82 percent of Alibaba’s sales in the year through March. The company posted revenue of $8.46 billion for the period, with $3.76 billion in net income.
In the company’s first quarter, profit surged as advertisers boosted spending on the Tmall and Taobao platforms. Net income almost tripled to $1.99 billion, or 84 cents a share, in the three months ended June 30, helped by a $1 billion gain on the revaluation of larger stakes acquired in UCWeb Inc. and OneTouch.
Alibaba filed to go public in May, choosing the U.S. as its venue after Hong Kong regulators rejected its proposed governance structure. Alibaba is governed by a partnership of 27 insiders, including co-founders Ma and Tsai, who will have the ability to nominate a majority of the board.
Yahoo’s valuation is partially pinned on its stake in Alibaba, as investors speculate that the Sunnyvale, California- based company could use proceeds from the IPO for large acquisitions. In July, the company said it planned to keep a bigger stake in Alibaba than it originally projected, and would return at least half of the cash it raises to shareholders.
Japan’s SoftBank Corp. owns a 34 percent stake of Alibaba and doesn’t plan to sell shares in the offering, today’s filing shows.
Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc. are managing the offering. Simpson Thacher & Bartlett LLP and Sullivan & Cromwell LLP are providing legal advice.
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