Alibaba gears up to raise over $15bn in 'biggest technology flotation ever'
Yahoo and Softbank are shareholders in China giant
Alibaba Holdings gave investors a closer look at the scale and growth of the Chinese e-commerce juggernaut in an IPO prospectus in the first step of what could become the largest technology debut in history.
Alibaba, which powers four-fifths of all online commerce conducted in China, is expected to raise upward of $15 billion and potentially surpass the $16 billion that Facebook Inc managed in 2012. It will become the largest Chinese corporation to have sought a home on U.S. exchanges
The company handled more than 1.5 trillion yuan, or about $248 billion, of transactions for 231 million active users across its three main Chinese online marketplaces in 2013, more than Amazon and eBay combined.
"If it is able to transport that kind of power to outside China, it has the potential to become a true global ecommerce powerhouse," said Roger Entner, Lead Analyst and Founder of Recon Analytics. "Everybody thought Amazon could do it but now we have to rethink Amazon in the light of being the most successful company in that field in the U.S. -- but not in the world."
Unlike many of the more prominent U.S. technology IPOs of recent years, Alibaba's list of significant shareholders is short. By contrast, Facebook and Twitter each broke out shareholdings from more than a half dozen individual principal shareholders.
Former English schoolteacher and co-founder Jack Ma now owns 8.9 percent of Alibaba. Yahoo Inc and Softbank own 22.6 percent and 34.4 percent of the company, which said on Tuesday it is still deciding between the New York stock exchange and the Nasdaq as a listing venue.
Yahoo must sell roughly 40 percent of its Alibaba stake in the IPO or sell the shares back to Alibaba directly prior to the IPO.
Yahoo and Softbank may be among the biggest beneficiaries of Alibaba's IPO, but neither will exercise much control of the Chinese company despite their shareholdings.
Under an agreement struck with those two major shareholders, Yahoo Chief Development Officer Jacqueline Reses will resign from the board upon the listing, while Softbank will have the right to nominate just one director to a new, 9-member board.
Alibaba's IPO has spurred levels of excitement in Silicon Valley and Wall Street circles unseen since Facebook Inc's record-breaking $16 billion coming-out party.
It will debut in a stock market where high-flying stocks like Twitter's and Amazon's have in past weeks been brought back to earth, in a selloff that has polarized Wall Street even as it revives doubts about soaring tech-sector valuations.
The proposed IPO size in Tuesday's filing is an estimate for the purpose of calculating exchange registration fees. Analysts expect the company to eventually raise an amount surpassing Facebook's, garnering a market value of more than $160 billion.