Alibaba Holdings Inc. will seek to raise $1-billion (U.S.) in what could become the largest technology debut in history, the Chinese e-commerce and payments giant said on Tuesday in a filing for its eagerly anticipated Initial Public Offering.
Alibaba, which powers four-fifths of all online commerce conducted in the world’s second-largest economy, becomes the largest Chinese corporation to have sought a home on U.S. bourses.
Former English schoolteacher and co-founder Jack Ma now owns 8.9 per cent of Alibaba. Yahoo Inc and Softbank own 22.6 per cent and 34.4 per cent of the company, which said on Tuesday it is still deciding between the New York stock exchange and the Nasdaq as a listing venue.
Its 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 in 2012.
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.
Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Morgan Stanley and Citigroup will underwrite the IPO.
The filing sets the stage for the technology industry’s biggest initial public offering since short messaging service Twitter and its early investors collected $1.8-billion in its stock market debut last fall.
Although it’s not nearly as well-known as Facebook Inc., Alibaba has emerged as an e-commerce powerhouse that makes more money than Amazon.com Inc. and eBay Inc. combined.
Founded by former English teacher Ma, 49, in a Hangzhou apartment, Alibaba started with a few dozen items for sale. Alibaba’s market value is estimated at $168-billion, bigger than 95 per cent of the Standard & Poor’s 500 Index - and the most valuable Internet company after Google Inc., according to data compiled by Bloomberg.
In China, Alibaba’s brands are household names. It operates an online shopping center, Tmall, where global companies like Disney, Apple, L’Oréal, Nike and Procter & Gamble have set up virtual storefronts to sell products directly to Chinese shoppers. Another of its sites, Taobao, is aimed largely at small Chinese firms that want to sell items to Chinese consumers.
Last year, the value of all merchandise sold on Alibaba exceeded $200-billion, according to a person briefed on the figures, more than the volume on eBay and Amazon combined.
U.S. companies like Google and eBay can only dream of making the kind of profit margin that Alibaba enjoys. Last year, Alibaba had net income of $3.56-billion on revenue of $7.95-billion. That translates into a profit margin of roughly 45 per cent. In comparison, eBay mustered a 17.8 per cent margin.
Alibaba shares are not expected to begin publicly trading for several months, as the Securities and Exchange Commission reviews the company’s offering materials and the company holds a roadshow to promote its prospects to institutional investors.
With files from AP and The New York Times
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