Alibaba in Talks with London, New York, Hong Kong for $15 Billion IPO

By Catherine Matacic

First, it was Hong Kong. Then, it was New York. Now, Alibaba is mulling a London listing for its potential $15 billion IPO. According to sources at talks with UK officials in Hong Kong, Alibaba senior executives expressed “huge interest” in an IPO on the London Stock Exchange. But this could be just one more round of haggling for the e-commerce giant, which is in the middle of drafting a “Plan B” for a Hong Kong listing, according to Chinese media.

Alibaba earlier this month abandoned a Hong Kong IPO, after exchange authorities rejected its request for a special dual-class share structure. Under that structure, its 28-member partner committee would have been allowed to nominate a majority of Alibaba’s board of directors, even as they retained minority ownership stakes. The company has vigorously defended its partnership system, calling it “the essence of success” for the nearly $100 billion company.

Since seemingly abandoning Hong Kong, Alibaba has entered into talks with the New York stock exchanges. Both the New York Stock Exchange and Nasdaq have confirmed that they would accept Alibaba’s partnership structure. But a US listing would bring additional risks, such as class action lawsuits, and founder Jack Ma has made it clear that Hong Kong is still his favorite pick.

Even as Alibaba is courting New York and London, it is also drafting a compromise structure that would reportedly surrender partner control of board nominations in exchange for a guarantee that the CEO would be one of its 28 partners. But such a compromise might not even be necessary: recently, Hong Kong’s stock exchange has sent signals that it might be willing to negotiate so as not to lose one of the world’s most valuable tech companies.

With second quarter profits of $1.73 billion, Alibaba holds a commanding share of China’s growing e-commerce market. In addition to its online marketplace, it has recently branched into instant messaging and personal finance products. Analysts have speculated that an Alibaba IPO could raise even more than Facebook’s $16 billion offering last year.

[author] Catherine Matacic ([email protected]) is associate editor of the China Business Review. [/author]