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Alibaba picks US for IPO; in talks with six banks for lead roles
Chinese e-commerce giant Alibaba Group Holding Ltd has decided to hold its long-awaited IPO in the United States and is in discussions with six banks to underwrite the deal, in what is set to the most high-profile public offering since Facebook’s listing nearly two years ago.
Alibaba said in a statement on Sunday it had decided to begin the US IPO process, ending months of speculation about where it would go public.
Separately, sources told Reuters that Alibaba is in discussions with Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs Group, J.P. Morgan, and Morgan Stanley for lead underwriting roles.
Most of the six banks are to set to win the coveted role of joint global coordinator, added the sources, who were not authorised to discuss the matter publicly.
Analysts estimate the Hangzhou, China-based company has a value of at least $140 billion, and the IPO proceeds could exceed $15 billion, Reuters previously reported. The deal would be a huge coup for the six banks, as it would yield an estimated $260 million in underwriting fees, assuming 1.75 per cent commission, and catapult them in league table rankings.
Alibaba declined to comment on the banks working on the deal. The banks mentioned in the report either declined comment or did not respond to Reuters’ requests for a comment.
“This will be a huge deal, bigger than what people were anticipating,” one person familiar with the process said, adding that the IPO was expected to be kicked off “very soon”.
Reuters reported on Saturday that Alibaba is planning a US IPO in the third quarter, with a filing of documents expected as early as April.
Alibaba, whose platforms handle more goods than EBay and Amazon.com combined, was founded in 1999 by former English teacher Jack Ma and 17 other people. It has grown from a startup in Ma’s apartment to a behemoth with offices around the world and more than 20,000 employees.
The listing will be closely watched by Alibaba’s two largest shareholders — Yahoo, which owns 24 per cent, and Japan’s Softbank Corp, which controls 37 per cent. Alibaba’s founders and some senior managers jointly own about 13 per cent of the company.
Yahoo has said it plans to trim its stake in Alibaba through the IPO. It initially invested in Alibaba in 2005.
Alibaba’s decision to go to the United States is a blow to the Hong Kong stock exchange, which was initially the company’s preferred venue for the IPO.
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