Chinese E-commerce Giant Alibaba Files for IPO in U.S.

Young men walk past the corporate logo at the headquarters of Alibaba Group in Hangzhou, Zhejiang province, China, in May 2012. (Photo: AP)
Young men walk past the corporate logo at the headquarters of Alibaba Group in Hangzhou, Zhejiang province, China, in May 2012. (Photo: AP)

Chinese e-commerce giant Alibaba Tuesday filed its much-anticipated plans to sell shares in what could be one of the biggest initial public offerings ever.

Alibaba said it plans to raise $1 billion, but before it is priced later this year, that amount is likely to be far higher. Analysts expect Alibaba’s IPO to surpass that of Facebook, which raised $16.4 billion in 2012, and be nearly as big as the 2008 offering by credit card giant Visa, which raised about $17.9 million.

Alibaba’s registration statement was more than 2,300 pages long, but it was short on specifics regarding the IPO. The filing did not specify an offering price, what exchange American Depositary Shares would be listed on, even what stock symbol Alibaba would trade under. Still, the filing did shed light on the company’s impressive business model and growth trajectory.

Started by former English teacher Jack Ma in 1999, Alibaba is a mashup of businesses, making the bulk of its revenue as an Internet middleman, charging sellers for marketing and advertising. Alibaba’s Alipay division – which is not part of the IPO – is the world’s largest payment processor.

At the end of 2013, Alibaba said it had 231 million active monthly buyers, up 44% from a year earlier. For the nine months ended in December, Alibaba generated net income of $2.9 billion on revenue of $6.5 billion.

Alibaba’s potential market capitalization has soared since 2012, when it was valued at less than $40 billion following a bond offering. Alibaba’s growth potential was further underscored in Tuesday’s registration statement. On-line shopping represented just under 8% of Chinese consumption in 2012. But that’s projected to grow at an annual rate of 27% through 2016.

As the largest e-commerce player, Alibaba is also poised to benefit from mushrooming Internet use. About 618 million Chinese – 46% of the country’s population – used the Internet 2013. That’s expected to rise to 790 million by 2016, Alibaba says.

Chinese e-commerce giant Alibaba Tuesday filed its much-anticipated plans to sell shares in what could be one of the biggest initial public offerings ever.

Alibaba said it plans to raise $1 billion, but before it is priced later this year, that amount is likely to be far higher. Analysts expect Alibaba’s IPO to surpass that of Facebook, which raised $16.4 billion in 2012, and be nearly as big as the 2008 offering by credit card giant Visa, which raised about $17.9 million.

Alibaba’s registration statement was more than 2,300 pages long, but it was short on specifics regarding the IPO. The filing did not specify an offering price, what exchange American Depositary Shares would be listed on, even what stock symbol Alibaba would trade under. Still, the filing did shed light on the company’s impressive business model and growth trajectory.

Started by former English teacher Jack Ma in 1999, Alibaba is a mashup of businesses, making the bulk of its revenue as an Internet middleman, charging sellers for marketing and advertising. Alibaba’s Alipay division – which is not part of the IPO – is the world’s largest payment processor.

At the end of 2013, Alibaba said it had 231 million active monthly buyers, up 44% from a year earlier. For the nine months ended in December, Alibaba generated net income of $2.9 billion on revenue of $6.5 billion.

Alibaba’s potential market capitalization has soared since 2012, when it was valued at less than $40 billion following a bond offering. Alibaba’s growth potential was further underscored in Tuesday’s registration statement. On-line shopping represented just under 8% of Chinese consumption in 2012. But that’s projected to grow at an annual rate of 27% through 2016.

As the largest e-commerce player, Alibaba is also poised to benefit from mushrooming Internet use. About 618 million Chinese – 46% of the country’s population – used the Internet 2013. That’s expected to rise to 790 million by 2016, Alibaba says.

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SOURCE: Gary Strauss
USA TODAY

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