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Chinese online retailer Alibaba Group is ready to debut in the US market with its first initial public offering (IPO) at the country’s stock market on September 18. With its entry, the Chinese conglomerate is set to script history in the US stock market.
According to the latest documents filed with the Securities and Exchange Commission (SEC) on Friday, Alibaba has planned to raise up to USD 24.3 billion (£15bn) in its share sale when it begins trading at the at the New York Stock Exchange (NYSE) from September 19 under the code BABA.
Sources say the company is likely to set the share price on September 18.
With a whopping amount of USD 24.3 billion, Alibaba will break previous record amount of USD 22.1 billion set by Agricultural Bank of China.
As the IPO debut of the Chinese retail giant into the American market nears, speculations, fears and high hopes are mounting higher day-by-day.
Here are the top ten reasons you should know as an investor in Alibaba:
- Analysts say the company is likely to keep its share price in the range of USD 60-66 per share. With this size, Alibaba’s IPO would become the largest ever for a US-listed firm.
- The total value of the company is expected to be about USD 163 billion, which is really a big one in the US stock market history.
- The speculated worth value will make the Chinese retailer larger than 95 percent of the firms featuring on the S&P500. Hence, being a shareholder into a big company like Alibaba is a fair deal.
- Alibaba is expected to raise about USD 21 billion, which would be more than USD 17.9 billion raised by Visa in 2008, the largest US IPO till date.
- The Chinese firm would sell 320.1 million depositary shares in its IPO in the US. And the share price ranges between USD 60 to USD 66 per share. Analysts say the expected price range is a worthy deal for the investors.
- If the company’s projections materialize, the market cap of Alibaba would go as high as USD 245 billion overnight.
- Analysts say the Chinese company that was barely known to anyone just a few weeks ago will be bigger than prominent companies like Facebook, eBay and Amazon in an instant.
- Once it goes public, Alibaba will soon turn into enormous cash war chest. With huge cash in hand it will go hunting for acquisitions that boost customer penetration and revenue simultaneously.
- The deal bigger as Alibaba’s magnitude has already sent enormous shockwaves across the financial markets. Sources say the company plans to sell nearly half of its stake while giving them a mammoth amount of cash. But where will all those cash go? Analysts say the money will go to three places:
- The company could return the cash to shareholders via a buyback
- The cash could be handed out to the shareholders with a hefty dividend
- Last but not the least, the company could start focusing on expansion projects by making some big acquisitions
Analysts say, in any case, it’s a victory situation for the shareholders.
10. Slow and steady wins the race. This adage goes very well with Alibaba. Its sales rose 55 percent in the year that ended in March, while its net income rose nearly six-fold over two years.