Alibaba To Debut On NYSE As Largest U.S. IPO In History

alibabaShares of Alibaba Group Holding Ltd. will trade for the first time Friday morning on the New York Stock Exchange after the Chinese based e-commerce company priced its shares for $68.00 a share on Thursday at the top range and is set to launch an initial public offering that will raise $21.8 billion, the largest U.S. IPO offering in history that surpasses Facebook’s $16 billion in 2012 and Visa’s $ 19.65 billion public offering in 2008.

Today’s IPO values Alibaba at $ 168 billion, higher than Amazon’s valuation of $ 150 billion, and the 36th largest publically traded company in the world by market capitalization, according to S & P Capital IQ.

Based in Hangzhou, a Silicon Valley type of tech hub in China, Alibaba Holding has a group of  e-commerce businesses including online retail and payment services, a shopping search engine, cloud computing services, and  business-to-business online web portals.

Founder Jack Ma is China’s richest man and could be among the top 20 richest men in the world after the IPO on Friday.

Last year Alibaba’s commerce based income was $5.4 billion for the first nine months of 2013 with annual revenue of 8.5 billion at year end on March 31st.

Nearly 40 institutions have placed orders for 1 billion in the company.

Shares of Alibaba were delayed after the opening bell on Friday.  Alibaba will be trading under the ticker BABA.

Questions have been raised about the style of corporate governance with Alibaba that has control of the company held by 30 insiders known as Alibaba Partnership who have the right to nominate candidates for the majority of the board seats.

Executive chairman Jack Ma and all the directors and executives under him hold around 20 percent of the combined shares in the company.

Based on the current corporate governance framework, Alibaba’s insiders may over time sell the remaining shares that they are holding although Alibaba’s governance style permits directors chosen by Alibaba Partnership to forever control the board despite the size of the stake that is held by members of the Partnership.

Alibaba’s early investors holding $8 billion in Alibaba shares are not subject to lock up rules that normally forbid shares from being sold immediately after an IPO.

-Johnathan Schweitzer

 

 

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