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Alibaba files to go public

Wednesday, May 07, 2014 - 03:43

May 06 - China's largest e-commerce company 's will become the largest tech debut in history- but while investors are enthusiastic- there are serious risks. Bobbi Rebell reports.

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The Alibaba IPO is finally a go. After much anticipation- China's largest e-commerce company filed for a $1 billion dollar initial public offering- analysts expect an eventual valuation of as much as $160 billion. It's leaving its options open when it comes to where it's going to list- the New York Stock Exchange or the Nasdaq, but IPO Financial's David Menlow says there's no contest: SOUNDBITE: DAVID MENLOW, PRESIDENT, IPO FINANCIAL (ENGLISH) SAYING: "If I were a betting man I would put my money on the New York. This is going to be a massive offering. It's going to make Facebook look like an also ran as far as what they went through. There will be many people doing many kinds of trades from all over the world. And let's face it New York seems to have the recognition that they are the exchange of last resort and where a company like this will be going." Alibaba's businesses include: Taobao- a marketplace for small businesses. It makes money by charging vendors to advertise. an online storefront for brand-name companies. And Alipay- while not part of the offering - it controls almost half of China's online payment market: SOUNDBITE: DAVID MENLOW, PRESIDENT, IPO FINANCIAL (ENGLISH) SAYING: "This is not the 800 pound gorilla in the room. This is the 800 ton gorilla. And maybe since it's a foreign stock we should make that metric ton. This is an enormous offering. This is one off as you suggested. We do not see that it will revitalize the market. This company is so involved and has so many facets of the commerce market within China, it's almost as if they are their own ETF, because they cover virtually every phase of that particular market." Alibaba already accounts for about 80 percent of all online shopping by individual consumers in China, which iResearch expects to reach $394 billion this year. But there are risks- including changes in the political and economic policies of the Chinese government. And there are uncertainties regarding the interpretation of Chinese laws. And the way the company is structured could limit shareholder influence. So far investors are interested- including Morris Mark, of Mark Asset Management. SOUNDBITE: MORRIS MARK, PRESIDENT, MARK ASSET MANAGEMENT (ENGLISH) SAYING: "We've had one opportunity so far to meet with the Alibaba management at a conference- very impressive. We have read a lot about it. This goes back years. It was an important factor in our decision to look at the other two companies and to stay with them, so love the business model. Highly creative, and this is a business that can spread eventually around the world. You know I think their model is a direct threat to Amazon." Current investors include Softbank and Yahoo- both with substantial stakes.. along with insiders Jack Ma and Joe Tsai. Yahoo has to sell about 40 percent of its stake or sell it to Alibaba directly before the IPO- What Yahoo will do with a sudden cash infusion is still unclear. But expect the stock to get a warm welcome- Kathleen Smith of Rennassance Capital: SOUNDBITE: KATHLEEN SMITH, PRINCIPAL, RENAISSANCE CAPITAL (ENGLISH) SAYING: "This is a company that so many investment managers are going to look at. Indexes are going to put them in. I expect the S&P 500 won't ignore this. It finally added Facebook, I'm sure Alibaba will be a candidate too. So it will be held by all kinds of portfolios. So I think that that kind of distribution of this IPO is going to be very favorable for it. " No information on the timing of this deal- but when it does land on U.S. shores Alibaba will be the largest Chinese company to list on a U.S. exchange.

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Alibaba files to go public

Wednesday, May 07, 2014 - 03:43

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