It what could be termed as the Alibaba effect, it has been just five days since the Chinese e-commerce giant began its global journey, as a part of its initial public offering (IPO) debut in the US stock market, so that it could promote itself to prospective buyers but the company’s underwriters have reportedly asked their sales staffs to close orders for the stock sale by Wednesday.
The industry insiders say a huge line of investors are showing intense interest in Alibaba’s IPO. In such a scenario, the company’s bankers are expected to eventually hike the price range for the IPO, pushing it past a fund-raising goal of USD 21.1 billion.
On Friday, the underwriters of Alibaba reportedly told their sales staffs that the company’s stock offering was already oversubscribed, with almost “no sensitivity” to the existing price range. Hence, the banks will get a comfortable environment for raising the price of the offering, just in a similar way as happened in other big IPOs of Facebook and General Motors.
However, insiders said the banks are still suspicious of pushing the stock price range too far as they don’t want the hurt the investments in the company upon its debut in the US market.
The recent documents with the Securities and Exchange Commission (SEC) has showed that the Chinese company has planned to raise up to USD 24.3 billion (£15bn) in its share sale when it begins trading at the NYSE under the code BABA.
With a whopping amount of USD 24.3 billion, Alibaba will break Agricultural Bank of China’s previous record amount of USD 22.1 billion.
Alibaba will come up with its final decision on next Thursday when underwriters are expected to reveal the price it’s offering after examining its order book. The company would then begin trading on the New York Stock Exchange (NYSE) the next day.
Whatever the price range is fixed for the Alibaba stock, once the company will go public it is expected to turn into enormous cash war chest, with which comes a massive hunting for acquisitions that boost customer penetration and revenue simultaneously.