Alibaba's growth accelerates, U.S. IPO filing expected next week

SAN FRANCISCO Wed Apr 16, 2014 1:08pm IST

A woman walks past an Alibaba advertisement on a wall in Hangzhou, Zhejiang province September 26, 2013. REUTERS/Chance Chan

A woman walks past an Alibaba advertisement on a wall in Hangzhou, Zhejiang province September 26, 2013.

Credit: Reuters/Chance Chan

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SAN FRANCISCO (Reuters) - Alibaba Group Holding Ltd's revenue growth accelerated in the last quarter of 2013, a timely lift for the Chinese Internet company as it prepares to file a prospectus next week for its highly anticipated initial public offering.

Alibaba is expected to file prospectus for the share sale as early as Monday, sources said, as it prepares for the largest U.S. IPO since Facebook Inc's 2012 coming-out party. Alibaba had no comment on the prospectus filing, a spokeswoman said.

The company which powers four-fifths of all Chinese online consumer shopping recorded a 66 percent surge in sales to $3.06 billion in 2013's final three months compared with a year earlier. The numbers - the latest available for Alibaba - were released on Tuesday alongside first-quarter 2014 earnings for 24 percent shareholder Yahoo Inc.

The listing is the most highly anticipated of what's expected to be a record year for U.S. tech debuts, spurred on by social media company Twitter Inc's successful 2013 IPO.

Alibaba's resurgence after several quarters of slowing growth helped lift shares of Japan's SoftBank Corp and Yahoo, which own 37 percent and 24 percent of the Chinese company and highly sensitive to the Chinese firm's growth prospects and valuation.

SoftBank's shares surged as much as 9.1 percent and traded 7.9 percent higher in mid-afternoon trading in Tokyo. Yahoo's stock gained more than 9 percent after hours, despite reporting anemic quarterly revenue and display advertising growth in its own business.

Executives with the U.S. company told analysts on a conference call they would not comment further on Alibaba's numbers, given that the Chinese company has entered a pre-IPO quiet period.

Alibaba is planning to award about one-third of the fees for its IPO in the form of incentive bonuses to coax better performance from underwriters, Bloomberg reported on Wednesday. The company plans to pay at least 1.1 percent of the total IPO proceeds in fees, making the fee pool at an estimated $200 million, the report added.

RAPID REBOUND

Alibaba's fourth-quarter sales growth came after it posted its slowest rate of growth in three quarters during the July-to-September period. For the October-December quarter it recorded a doubling in net income to $1.36 billion.

Alibaba, founded 15 years ago by outspoken English schoolteacher Jack Ma, has cornered the Chinese Internet consumer market and expanded into everything from online auctions to messaging and payments.

An IPO could arm the company as it tries also to dominate the nascent mobile shopping and social media arenas. Market participants expect it to raise as much as $16 billion this year.

Tencent Holdings Ltd has the upper hand in mobile services in China, including in areas like messaging and games, the most important battleground for the country's Internet companies.

In addition, Alibaba's strategy of building a global e-commerce empire with its own financial services is attracting close scrutiny from China's regulators and resistance from the country's banks.

(Reporting by Edwin Chan; Additional reporting by Fiona Lau of IFR and Prakash Chakravarti of IFR/LPC in HONG KONG; Editing by James Dalgleish, Jonathan Oatis and Kenneth Maxwell)

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