Alibaba Plans for $15 Billion Third Quarter US IPO

By E.J. Thomas

After months of speculation about a possible initial public offering (IPO) in London, Hong Kong, or the United States, Alibaba Group Holding Ltd. announced on March 16 that it has chosen to hold its IPO in the United States. Alibaba, which has been valued at more than $140 billion, controls nearly 80 percent of China’s e-commerce market. The company plans to file documents as early as April, with its official IPO taking place in the third quarter of 2014.

Alibaba will hold an IPO kickoff meeting in the United States on March 25 with Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs Group, J.P. Morgan and Morgan Stanley in lead underwriting roles, according to Reuters. The IPO, which analysts say could raise as much as $15 billion, will be the largest US IPO for a Chinese company and one of the largest IPOs in history. Alibaba has not stated publicly which US stock exchange will list the company, but the Wall Street Journal has reported that the New York Stock Exchange is currently the front runner.

Speculation surrounding an Alibaba IPO in either Hong Kong or the United States began last March, with Hong Kong emerging as the clear favorite of Alibaba founder Jack Ma. Negotiations between the Hong Kong stock exchange and Alibaba broke down in October 2013 when exchange authorities rejected the company’s request for a special dual-class share structure. Under that structure, the company’s 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.

After these negotiations broke down, Alibaba entered into talks with the London Stock Exchange. While engaging in those talks, the company drafted a compromise structure for the Hong Kong stock exchange that would surrender partner control of board nominations in exchange for a guarantee that Alibaba’s CEO would be one of its 28 partners. The compromise structure failed to get enough support from the exchange’s regulator, the Securities and Futures Commission, as the group was divided over the legality of the compromise.