China's Alibaba files for flotation in US as analysts predict the largest ever IPO

Out-Law News | 09 May 2014 | 10:07 am | 1 min. read

Chinese e-commerce company Alibaba has filed documents for its planned stock market flotation in the US as it moves forward with what analysts suggest could be the biggest initial public offering (IPO) in history.

According to its filing documents, Alibaba is seeking to raise $1 billion, however analysts expect the sale to raise more than £15 billion, the BBC said, and perhaps exceed Facebook's $16 billion IPO of 2012.

Alibaba announced its decision to float in the US earlier this year after failing to reach an agreement with the Hong Kong listing authorities about the appointment of board members after flotation. However the company, which the BBC has described as the world's largest online retailer, has not revealed whether it will float on the US Nasdaq or New York Stock Exchange, nor the number of shares it intends to sell, nor their price range, said the BBC.

The IPO filing documents revealed that in the nine months to the end of December 2013, Alibaba generated revenues of $6.5bn, resulting in a net profit of $2.9bn, said the BBC. Last year Alibaba's various platforms sold $248bn worth of goods, with more than 11.3 billion orders placed. According to the BBC, the total value of merchandise sold on its platforms last year was more than that sold on Amazon and eBay combined. Alibaba said that smartphone activity accounted for 72% of mobile commerce in China.

Alibaba was founded 15 years ago by Jack Ma, a former English teacher. As well as its e-commerce activities, Alibaba's operations include a cloud computing business and a group buying website. Analysts predict keen interest in the sale of the company from investors who will hope the firm will be able to replicate its success in China on a global scale.

Roger Entner, lead analyst and founder of Recon Analytics, told the BBC: "If it is able to transport that kind of power to outside China, it has the potential to become a true global e-commerce powerhouse."

Major shareholders in Alibaba include the US technology company Yahoo, which owns a 22.6% stake in the firm and Japan's Softbank, which has a 34% stake in the company, according to the BBC.

Alibaba said it would not list on the Hong Kong stock exchange after a dispute with the exchange. According to the Financial Times Alibaba had wanted to control the make-up of its board, allowing a group of senior managers to nominate a majority of its directors. This arrangement was seen as having the same effect as a dual-class share structure, undermining Hong Kong's principle of one-share, one-vote. Dual-class share structures, which give more voting power to a minority group of owners, are banned under Hong Kong listing rules.