With no bank in charge, Alibaba's bankers learn to work together

Tue Sep 9, 2014 3:07pm EDT
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By Liana B. Baker, Elzio Barreto and Olivia Oran

(Reuters) - Alibaba Group Holding Ltd's desire to keep tight control over its $21.1 billion share sale has left a vacuum at the helm of its banking syndicate, leading underwriters to take unusual steps to manage the offering, according to sources familiar with the situation.

Typically, initial public offerings have a "lead left" bank that controls the process, sometimes as a first among equals in the syndicate. Facebook Inc, for example, had Morgan Stanley in that role, while Twitter Inc used Goldman Sachs Group Inc for the job.

Alibaba, however, decided to do without one bank in charge of its IPO, and instead is seeking advice from all its major bookrunners.

The move gives Alibaba control of the process as no one bank has a complete picture of what is going on. It also helps avoid potential pitfalls of relying too much on one institution. Facebook's botched 2012 IPO was also one of the reasons for this choice, sources have previously said.

But it has led to a complicated arrangement and left some bankers complaining that it has created additional layers of work, the sources said.

Alibaba declined to comment.

To make sure that the process goes smoothly, Alibaba’s six bookrunners have paired up and divided tasks among them, the sources said. The teams include: Credit Suisse Group AG and Citigroup Inc, Goldman Sachs Group Inc and Deutsche Bank AG, and Morgan Stanley and JPMorgan Chase & Co, the sources said.

All the banks declined to comment.   Continued...

An employee is seen behind a glass wall with the logo of Alibaba at the company's headquarters on the outskirts of Hangzhou, Zhejiang province, April 23, 2014.REUTERS/Chance Chan