E-commerce giant Alibaba to open sesame with IPO
SHANGHAI: As Alibaba chief Jack Ma steps aside after building the world’s largest online retailer, the Chinese firm is preparing a huge stock offer prompting comparisons with Facebook – whose profits it dwarfs.
In 14 years, Alibaba Group has grown from a start-up in the eastern city of Hangzhou to an Internet commerce giant which bested eBay in a public battle for dominance of the vast Chinese market.
Expectations are building for an overseas initial public offer ( IPO) as early as this year with 48-yearold founder Ma due to move aside as chief executive officer today, dropping hints without revealing specific plans.
“The whole world knows Alibaba is going to launch an IPO, but I do not know when,” he said just days ago, according to a Chinese newspaper report.
A diminutive former English teacher, Ma set up Alibaba in 1999, convincing friends to fund him with US$ 60,000 and picking a recognisable name with the aim of helping small firms find treasure by selling through the Internet.
He will remain as chairman to provide strategic direction but will leave daily operations to right-hand man Lu Zhaoxi.
The IPO would give buyers a chance to invest in the Chinese economy, the world’s second largest, as well as an Internet
The whole world knows Alibaba is going to launch an IPO, but I do not know when. Jack Ma, Alibaba CEO
success story, analysts said.
“Any institutional investors who have funds where they want exposure to the Internet and to China are going to be almost automatic buyers of Alibaba,” said Bill Bishop, a columnist for The New York Times’s DealBook.
China’s annual online sales were forecast to reach between US$ 420 billion and US$ 650 billion by 2020, by which time it would be the world’s largest online retail market, consulting firm McKinsey estimated.
Alibaba, which provides a platform to connect online buyers and sellers, now controlled more than 90 per cent of the market for consumer-to- consumer transactions in China and over half of business-to- consumer deals, McKinsey said.
The group includes China’s most popular online shopping destination Taobao Marketplace, which marks its 10th anniversary Friday and had more than 800 million product listings and over 500 million registered users last year.
An IPO could value Alibaba at between US$ 60 billion and US$100 billion, according to analysts.
“They could probably get somewhere in the Facebook range,” said Bishop.
The US social media giant raised US$ 16 billion when it went public in May last year, valuing the company at more than US$ 100 billion at the time, but a fall in the share price since had sparked investor anger.
Facebook recorded
profits of US$ 64 million in the fourth quarter of last year.
In contrast, Alibaba Group made US$ 642 million in the same period, the latest available figures showed.
Ma sold a 43 per cent stake in Alibaba to Yahoo! for US$ 1 billion in 2005, but relations with the US Internet pioneer were stormy and last May Yahoo! said it had agreed to sell its shares back to Alibaba for more than US$ 7 billion. — AFP