Chinese online retailing giant Alibaba Group seems all set to script a history when it will launch its first initial public offering (IPO) at the US stock market on September 18.
Alibaba has planned to raise up to USD 24.3 billion (£15bn) in its share sale, giving a defeat to the Agricultural Bank of China’s previous record amount of USD 22.1 billion, according to the fresh documents filed by the Chinese conglomerate with the Securities and Exchange Commission (SEC) on Friday.
The company will embark upon a road show for finalizing its share price, which the analysts say is likely in the range of USD 60-66 per share. This size would make the initial public offering (IPO) of Alibaba the largest ever for a US-listed firm. Hence, the total value of the company is expected to be about USD 163 billion.
Market watchers say Alibaba’s IPO is going to be really a big one in the history as its worth value (which is expected to be about USD 163 billion) makes the Chinese retailer larger than 95 percent of the companies featuring on the S&P500.
Moreover, the whopping value would make Alibaba the third most valuable Internet firm after Google and Facebook.
According to the sources, the company is likely to set the share price on September 18 and will start trading at the New York Stock Exchange (NYSE) from the next day, i.e. September 19.
The market analysts further said that Alibaba is tend to rule the US IPO history even if the company’s underwriters, i.e. the banks offering the share sale, fail to buy additional shares. In that condition too, Alibaba would raise about USD 21 billion, which would be more than Visa’s USD 17.9 billion raised in 2008 that had been the largest US IPO.
According to Alibaba, the company would sell 320.1 million depositary shares in the US in its IPO at a price ranging between USD 60 to USD 66.
Jack Ma, Founder and chairman of Alibaba, could make over USD 840 million before taxes by selling12.75 million shares worth USD 66 per share in the IPO. Analysts say MA’s total holding in the company would be about 193 million shares of total value USD 12.76 billion even after the IPO.
Alibaba’s vice chairman Joseph Tsai could make USD 280 million before taxes by selling 4.25 million shares. Following the IPO, his remaining 3.2 percent stake in the company will be worth over USD 5.2 billion at USD 66 per share.
Alibaba may extend olive branch to Yahoo
The news of Alibaba’s pending stock sale may be a respite for the beleaguered Web portal Yahoo.
Yahoo owns about a quarter holding of Alibaba and the pending stock sale of the Chinese retail giant could trigger a huge tax bill for the tech company. Analysts say it can offset this load just by going a tax maneuver way involving floating new debt.
Sources say Yahoo has planned to sell 121.7 million shares of its Alibaba stake, totaling USD 8 billion before taxes. The amount can be used by Yahoo CEO Marissa Mayer to help turnaround the fate of struggling web portal.
Reports suggest that the tech company is expected to keep over 400 million shares, which is a 16.3 percent stake that could be worth USD 26.5 billion.