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September 07, 2014

Alibaba Plans To Raise As Much As $24 Billion In Biggest U.S. IPO Ever

Chinese online retailing conglomerate Alibaba Group plans to raise as much as $24 billion in an initial public offering according to new documents filed with the Securities and Exchange Commission on Friday. At that size, Alibaba’s IPO would be the largest ever on for a U.S.-listed company and would value the firm at about $163 billion

The company said it would sell 320.1 million American depositary shares in its IPO at a price between $60 to $66. At the top of that range, Alibaba would be worth more than American online retailers including eBay, which has a market capitalization of $68 billion, and Amazon.com, which was worth about $161 billion at end of Friday trading.

Founder and chairman Jack Ma could make over $840 million before taxes by selling 12.75 million shares at $66 per share in the offering. Following the IPO, which is expected later this month, his total holding in Alibaba will still be about 193 million shares–worth $12.76 billion.

Joseph Tsai, Alibaba’s vice chairman, stands to make $280 million before taxes by selling 4.25 million shares. His remaining 3.2% stake following the IPO will be worth more than $5.2 billion at $66 per share.

In Alibaba’s latest earnings report, sales in the second quarter rose 46% to $2.54 billion, and net income nearly tripled to $1.99 billion from the year prior. Alibaba also showed strong growth in mobile, where it has fierce competition from Tencent and other Chinese internet companies. E-commerce transactions over mobile comprised one-third of gross merchandise volume. Mobile revenue was about $400 million for the quarter, up from $190 million in the previous quarter.

Yahoo plans to sell 121.7 million shares of its Alibaba stake, netting $8 billion before taxes that CEO Marissa Mayer can use to help turnaround the struggling web portal. Yahoo will keep over 400 million shares, a 16.3% stake that could be worth $26.5 billion.

Billionaire Masayoshi Son’s tech giant SoftBank plans to keep all of its shares of Alibaba through the offering. Its 32.4% stake would be worth over $52 billion at the top of the range.

Reports suggest that the company will embark on its investor roadshow as early as next week and could begin trading on the New York Stock Exchange as early as Sept. 19. The company plans to trade under the ticker BABA.

 

Text by Forbes
 

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