Alibaba files for what may be biggest tech IPO

Wed May 7, 2014 2:47pm EDT
 
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By Alexei Oreskovic and Deepa Seetharaman

SAN FRANCISCO (Reuters) - Alibaba gave investors a closer look at the scale and growth of the Chinese e-commerce juggernaut in an initial public offering (IPO) prospectus filed on Tuesday, the first step in what could be the largest technology debut in history.

Alibaba Group Holding Ltd, which powers 80 percent of all online commerce in the world's second-largest economy, is expected to raise more than $15 billion, and could top the $16 billion pulled in by Facebook Inc when it listed in 2012.

The bulk of the proceeds will go to Yahoo Inc - which bought a 40 percent stake in Alibaba in 2005 for $1 billion and which must sell more than a third of its current 22.6 percent stake through the IPO. Alibaba also plans to sell new shares, people familiar with the plans have said, to bulk up a cash war chest depleted by a rash of recent acquisitions.

While the Alibaba brand is less well known in the United States than Internet companies such as Amazon.com and Facebook, the Chinese company's listing has stirred the most excitement in Silicon Valley and Wall Street since Facebook's record IPO. Alibaba will become the largest Chinese corporation to list in the U.S. - on either the New York Stock Exchange or the Nasdaq.

Alibaba will debut later this year in a market where high-flying tech stocks like Twitter and Amazon have fallen in recent weeks in a sell-off that has divided analysts and investors, reviving doubts about soaring tech valuations.

Still, estimates of Alibaba's market value have soared in recent months, to even beyond $200 billion, underscoring Wall Street's eagerness to take a crack at a massive Chinese company with robust growth.

Alibaba handled more than 1.5 trillion yuan - about $248 billion - of transactions for 231 million active users across its three main Chinese online marketplaces in 2013, more than Amazon and eBay Inc combined. It did so with 20,884 full-time workers, fewer than eBay.

"If it's able to transport that kind of power to outside China, it has the potential to become a true global e-commerce powerhouse," said Roger Entner, lead analyst and founder of Recon Analytics. "Everybody thought Amazon could do it, but now we have to re-think Amazon in the light of being the most successful company in that field in the U.S. - but not in the world."   Continued...

 
Alibaba's logo is seen at its headquarters on the outskirts of Hangzhou, Zhejiang province April 23, 2014. Picture taken April 23, 2014. REUTERS/Chance Chan