Does Alibaba Have The Biggest IPO Ever?

Sep 18, 2014

As the Alibaba Group gears towards its initial public offering (IPO), expected later this week, potential investors may be interested to know who is selling and where the shares are coming from.

The Hangzhou-based e-commerce group could sell up to 368 million shares if underwriters exercise the option to buy the maximum amount of stock, making the sale one of the biggest US-listed IPOs ever and possibly even the biggest global IPO.

According to Forbes, as much as 14.9 per cent of the Chinese conglomerate could be floated on the public market. If Alibaba prices its shares at the top end of the proposed $66 to $68 range, its stockholders could receive a combined total of over $25 billion (£15 billion).

The company, which would have a value of $168 billion, if shares reach the top of the price range, is offering roughly a third of the stock being sold. It plans to sell approximately 123 million shares to underwriters, adding $8.4 billion pre-tax to company funds.

Internally, Chairman Ma and Vice Chairman Joseph Tsai are the only two executives offering a significant amount of stock. Ma is selling about six per cent of his current stake, netting him about $867 million (£529 million) before taxes. Tsai is looking to sell 4.25 million shares, leaving him with about 3.2 per cent of Alibaba following the IPO.

External stockholders will also be offering shares. The company's second largest shareholder, Yahoo, which at one point owned 40 per cent of the firm, is selling just fewer than 122 million shares, amounting to $8.3 billion (£5 billion) pre-tax, based on $68 a share.

Private equity firms will be involved with the offering, with US buyout shop Silver Lake selling almost seven per cent of its 58.9 million shares.

Finally, Alibaba's employees, past and present, are expected to offer almost 15.5 million shares in total, approximately 0.5 per cent of those being offered.


Author: Barclay Ballard
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