Alibaba's IPO may be biggest filed in US
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E-mail China Daily, May 8, 2014
China's largest e-commerce company Alibaba Group has filed what could become the biggest initial public offering in the United States as it rides on the booming online shopping trend.
The Hangzhou-based company, founded by Jack Ma in 1999, plans to raise US$1 billion for general corporate purposes, it said in a filing to the Securities and Exchange Commission.
The actual proceeds from the new listing could surpass US$15 billion, according to market watchers, as the US$1 billion amount in the filing is a notional figure to get the IPO process rolling.
It is expected to be the biggest IPO in the technology sector since Facebook's US$16 billion offering in 2012.
It will also challenge Visa's US$19.7 billion IPO in 2008 to be the largest offering in US history.
"Going public is not our ultimate target, instead it's an important strategy and means to fulfill our mission, a pit stop on our journey forward," Ma, also its chairman, said in an e-mail address to the group's employees yesterday.
Although it's not well-known in the US, the 15-year-old Alibaba is an e-commerce powerhouse that makes more money than Amazon.com and eBay combined.
Alibaba's total transaction size, or gross merchandise volume, hit 1.5 trillion yuan (US$248 billion) last year and it served about 231 million active buyers across its three main Chinese online marketplaces -- consumer-to-consumer site Taobao, business-to-consumer site Tmall and group buying site Juhuasuan.
For the full year ended on March 31, 2013, its profit jumped 85 percent to US$1.4 billion.
Alibaba's profit in the three months through December more than doubled to US$1.35 billion, as revenue surged 66 percent to US$3.06 billion, according to last month's earnings release by Yahoo, which owns a stake in Alibaba.
Jason Yu, general manager of consumer insight company Kantar Worldpanel, said Alibaba "will continue to drive the growth for e-commerce after its listing and this trend is set to provide further stimulus to brands as e-commerce proves to be instrumental in driving incremental sales amongst many FMCG (fast-moving consumer goods) categories."
Alibaba said in March that it decided to list in the US as it hopes to retain control of its board of directors in the hands of its founders and executives after Hong Kong's stock exchange rejected the violation of its "one-share-one-vote" principle.
Alibaba didn't say if it would list on Nasdaq or New York Stock Exchange.
It's also rushing to expand its mobile payment service to prevent its market share being eaten by rival Tencent's popular app WeChat, which offers smartphone instant messaging as well as mobile payment.
In the fourth quarter of last year, mobile transactions totaled 19.7 percent of its overall transaction size, a sharp jump from 7.4 percent in the same period a year ago.
"Mobile shopping posted strong growth in terms of Alibaba's total transactions, but it still faces potential challenge from rival Tencent's popular smartphone messaging application WeChat," chief analyst Li Zhi at Internet consultant Analysys International pointed out.
WeChat has integrated Tencent's online payment service Tenpay to allow easier payment from mobile devices once users have connected their bank accounts with WeChat accounts. Both companies are also rushing up to expand mobile payment services in a bid to capture a bigger market share.
As China's central bank increases supervision of its third-party payment company Alipay as well as other payment services, Alibaba warned in the prospectus that its business may be "materially and adversely affected" if "the quality, utility, convenience or attractiveness of Alipay's services declines."
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