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China’s Alibaba plans stock offering

Wed., May 7, 2014, midnight

E-commerce firm bigger than eBay,

SAN FRANCISCO – Alibaba Group, China’s leading e-commerce company, is dangling a deal that could turn into one of the biggest IPOs in U.S. history.

In a long-awaited move made Tuesday, Alibaba filed papers for an initial public offering of stock seeking to raise at least $1 billion.

The documents set the stage for the technology industry’s biggest IPO public offering since Twitter and its early investors collected $1.8 billion in the online short messaging service’s market debut last fall.

Depending on investor demand for its stock, Alibaba could try to raise more money and even surpass the $16 billion that Facebook raised in its IPO two years ago.

For now, Alibaba isn’t specifying how much stock will be sold in the IPO, or setting a price range or saying which exchange its stock will trade on. Those details will emerge as the IPO progresses. The process is likely to take three to four months to complete before Alibaba’s shares begin trading.

The rise of e-commerce in China has given millions of households wider access to clothes, books and consumer electronics in a society that in the 1980s still required ration tickets for some supermarket items. That was aided by Alibaba’s launch of an online payment system, Alipay, which filled the gap for the shoppers who lacked credit cards.

Still growing at an explosive rate, online shopping is forecast by consulting firm McKinsey to triple from 2011 levels to $400 billion a year by 2015.

Alibaba didn’t choose an optimal time to go public. Several Internet company stocks that soared last year amid high hopes have plummeted this year as investors reassess their prospects. Twitter Inc. has been among the hardest hit. Since hitting a peak of $74.73 late last year, the company’s shares have lost more than half their value. They closed Tuesday at $31.85, just slightly above their $26 IPO price.

Despite the skittish conditions for Internet stocks, most analysts expect Alibaba’s IPO to bring in at least $10 billion, and sell its stock at a price that will give the 15-year-old company a market value of $150 billion to $200 billion. If those predictions are accurate, Alibaba will rank among the biggest IPOs ever.

It’s not unusual for highly scrutinized companies to list an artificially low fundraising target when they first file IPO papers.

Facebook Inc., for instance, originally said it would raise $5 billion in its IPO before eventually bringing in more than three times that amount. That deal remains the technology industry’s largest IPO.

Although it’s not nearly as well-known as Facebook, Alibaba is an e-commerce powerhouse that makes more money than Inc. and eBay Inc. combined. What’s more, the company is still growing at a rapid clip as its network of online services, including Taobao, Tmall and Alipay, mine a Chinese Internet market that already has 618 million Web surfers.

Last year, 231 million customers bought a total of $248 billion in merchandise on Alibaba’s e-commerce sites, according to the IPO documents.


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