Tópico: [EN] Alibaba Files for IPO
06-05-2014, 18:50 #1
[EN] Alibaba Files for IPO
Alibaba US$ 250 billion mission: "to make it easy to do business anywhere."
06-05-2014, 18:56 #2
Alibaba Files to Go Public in the U.S.
The e-commerce behemoth Alibaba filed in the United States on Tuesday to sell stock to the public for the first time, in an embrace of the global capital markets that represents a coming of age for the booming Chinese Internet industry.
“Alibaba is the fastest-growing Internet company in one of the fastest-growing economies in the world,” said Sameet Sinha, an analyst with B. Riley & Company, a boutique investment bank in Los Angeles. “They are like an Amazon, an eBay, and a PayPal.”
In the filing, Alibaba said it intended to raise $1 billion in an initial public offering – a figure used to calculate its registration fee. But the company is expected ultimately to raise $15 billion to $20 billion – which would make it the biggest American I.P.O. since Facebook’s $16 billion offering May 2012.
When it makes its debut on either the New York Stock Exchange or the Nasdaq market, Alibaba is also expected to have a share price that could value the company at roughly $200 billion — more than the market value of Facebook, Amazon.com or eBay, although still trailing that of Google of Apple.
Many investors may see Alibaba as their best chance yet to buy into China’s enormous growth. Yet the offering will also shine a bright light on a company that is relatively unknown in the West and whose complex web of businesses and dealings may put off potential shareholders.
In China, Alibaba’s brands are household names. It operates an online shopping center, Tmall, where global companies like Disney, Apple, L’Oréal, Nike and Procter & Gamble have set up virtual storefronts to sell products directly to Chinese shoppers. Another of its sites, Taobao, is aimed largely at small Chinese firms that want to sell items to Chinese consumers.
The company’s digital payment affiliate, Alipay, not only handles transactions on its sites, but is also widely used as a mobile payment system on cellphones in China, much as credit cards are used in other countries.
Last year, the value of all merchandise sold on Alibaba exceeded $200 billion, according to a person briefed on the figures, more than the volume on eBay and Amazon combined.
American companies like Google and eBay can only dream of making the kind of profit margin that Alibaba enjoys. Last year, Alibaba had net income of $3.56 billion on revenue of $7.95 billion. That translates into a profit margin of roughly 45 percent. In comparison, eBay mustered a 17.8 percent margin.
Alibaba has much higher profit margins than American Internet companies, analysts say, because its costs are low. It doesn’t own the merchandise sold on its sites, making money instead from the merchants that pay a commission for access or buy ads to promote themselves. Alibaba also pays very little in taxes.
Wall Street has been eagerly awaiting an I.P.O., wanting to share in the company’s stupendous growth. Alibaba reigns as one of China’s top three Internet players, along with the search engine company Baidu and the media and gaming conglomerate Tencent, but is bigger and more profitable than those rivals.
Some investors have resorted to indirect routes to get a piece of Alibaba, like buying stock in Yahoo and Japan’s Softbank, which both hold major stakes in the Chinese company.
When Yahoo first bought a 40 percent stake in 2005, it valued Alibaba at just $2.5 billion. Six years later, when a consortium of investors took another stake in Alibaba, they did so at a valuation of about $32 billion. Now, analysts estimate that Alibaba may be worth anywhere between $130 billion and $235 billion.
And it’s not just the big money of Wall Street that looking to participate. The immense size of the offering means that Alibaba shares will probably find a home in a broad swath of mutual funds and pension funds — and thus indirectly in the portfolios of small investors around the world.
Shares aren’t expected to begin publicly trading for several months, as the Securities and Exchange Commission reviews Alibaba’s offering materials and the company holds a roadshow to promote its prospects to institutional investors.
That time frame increases the risk that investors will be less willing to take a chance on an expensive Internet stock, especially one with no public track record.
Technology stocks have fallen sharply in the last few weeks after an impressive run, with some analysts saying they are overvalued. At the same time, the market’s appetite for I.P.O.’s has also cooled.
Alibaba amassed its multi-billion-dollar fortune a little at a time, shrewdly capitalizing on two trends — the rise of the Internet and China’s growing prosperity.
The offering is being led by six banks: Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Citigroup.
SoftBank, the Japanese telecom giant, is Alibaba’s biggest investor with a 34.4 percent stake. Mr. Ma is the biggest individual shareholder, owning 8.9 percent of the stock; he is followed by his longtime lieutenant, Joseph C. Tsai, who owns 3.6 percent.
06-05-2014, 19:00 #3
Alibaba files for IPOAfter years of anticipation, Chinese e-commerce giant Alibaba finally made history on Tuesday when it filed for an initial public offering, in what was expected to be the biggest public offering the technology industry has ever seen.
In the US, Alibaba is perhaps best known -- until now -- for Yahoo's minority stake in the company. Given the size of the expected IPO, Alibaba's about to go into the annals on its own. This story is developing.
Alibaba was born in 1999, after co-founder Jack Ma, a former schoolteacher, settled on the name because he thought people would instantly recognize it from the folk tale "Alibaba and the 40 Thieves." In the 15 years since Alibaba's founding, the company has become a leader in e-commerce with a hyper-growth rate trumping better-known US competitors such as Amazon and eBay. The company's revenue rose 66 percent in its fourth quarter of last year. In contrast, Amazon's revenue rose 22 percent while eBay's climbed 14 percent.
The company's valuation, a wide range between $150-$250 billion, puts it in the top ten of the world's biggest tech companies -- a list that includes Apple, Google and Facebook. In China, the 49-year-old Ma, sometimes called the company's spiritual leader, has a celebrity following.
Like Amazon, Alibaba runs several platforms and services that are related to e-commerce. While Alibaba's original site serves as a platform for suppliers to sell goods to other companies, it owns several other sites. These include TaoBao, an eBay-like consumer to consumer sales site, and TMall, lets brands and businesses to sell to consumers. The Internet giant also has its own messaging platform and cloud computing service.
Another notable business is the company's affiliate Alipay, which processes the company's e-commerce payments. Similar to PayPal, Alipay allowed Alibaba to do online business at a time when most of the country's residents didn't own credit cards.Though the Alibaba Group launched the service in 2004, the two are now technically separate companies, after Ma spun out the payment service in 2010. The move generated a lot of controversy with investors Yahoo and Softbank, claiming they had not approved the deal. Alibaba is reportedly exploring regaining a stake in the company, though any such deal would almost certainly be made after the IPO.
But Ma's Alipay decision may factor into how Alibaba's IPO is priced, said Jay Ritter, a professor of finance at the University of Florida. Because of corporate governance issues like that one, the company may have to choose a price that's 10 to 20 percent lower than it could otherwise fetch, to attract investors worried about that risk, said Ritter.
An Alibaba spokesperson did not respond to a request for comment.
Founded in Hangzhou, China, Alibaba's decision to list in the US is a loss for the Hong Kong market. Regional financial leaders hoped for a locally-held offering, which would have been a boon for the Chinese business landscape. But after disagreements with Chinese regulators over listing rules -- specifically over a company's control of appointments to its board of directors -- Alibaba chose to go public in the US.
As the company heads toward its market debut, which is expected sometime this fall, it has enlisted Credit Suisse, Deutsche Back, Goldman Sachs, JPMorgan Chase, Citibank and Morgan Stanley to underwrite the process. Some of the company's investors include Silverlake and, of course, Softbank and Yahoo.
Even though Alibaba's importance has to do with more than Yahoo, the two companies are intimately tied. Yahoo owns a 24 percent stake in the company. After Alibaba's IPO, Yahoo could end up with $12 billion in cash on its balance sheet, according to Carlos Kirjner, an analyst at Sanford C. Bernstein & Co. Anticipation for the IPO has helped double Yahoo's stock in the last year, giving Yahoo CEO Marissa Mayer, who took over the company in July 2012, a more valuable acquisition currency while she's tried to turn around the lumbering tech giant.
But while ties to Alibaba have been a financial godsend for Yahoo, they've also been a glaring reminder of the aches in Yahoo's core business: The company's total market capitalization is about $39 billion. Subtract that from its stakes in both Alibaba and Yahoo Japan -- another Asian asset that's been a boon to Yahoo's finances -- investors seem to be saying that Yahoo's core business is worth less than nothing. Last month after Yahoo announced first-quarter earnings, the company's stock rose 8 percent despite mostly unimpressive financial results, mainly from investor excitement over Alibaba's success.
In the lead up to Alibaba's IPO, the company has been on a patent buying spree, purchasing most likely in preparation of its US debut. It owns 102 US patents and has applied to purchase 300 more for functions like payment processing, product recommendations and picture searches, Bloomberg reported last week. Bulking up on patents makes the company less susceptible to lawsuits from competitors who may want to throw a wrench into Alibaba's IPO plans.
As the company sets out for the public market, it also faces some challenges. Similar to Facebook at the time of its IPO, Alibaba is in an environment where its users are shifting from desktop computers to smartphones, and the company will need to adapt.
While Alibaba's e-commerce operation is colossal -- transactions on its websites sites totaled $240 billion last year, more than eBay and Amazon.com combined -- 90 percent of those transactions come from personal computers, according to the Wall Street Journal. Plus, regional competitors like the messaging service Tencent and the search engine Baidu are encroaching more on the e-commerce space, especially on mobile devices. So Alibaba must goad its customers onto smartphones to attract advertisers, particularly since the company makes much of its revenue by selling ads to vendors who want their storefronts to stand out.
Fortunately for Alibaba, there's precedent. Almost two years after Facebook went public in a similarly sized IPO, the social network now makes the majority of its advertising revenue -- 69 percent -- on mobile.
06-05-2014, 19:04 #4
What Alibaba's Giant IPO Says About America's Acceptance Of ChinaTongues whose closest contact with China might only be tofu in a Chinatown restaurant in the U.S. or Europe are aflutter this week about the Chinese IPO that may be the world’s largest ever: e-commerce giant Alibaba Group. Because of Alibaba’s heft – it accounts for as much as 80% of e-commerce in China and could dwarf nearly all U.S. Internet businesses with $250 billion in market capitalization, there are plenty of great questions for the investing public. Not the least: Is this a stock to buy? How will Alibaba’s stock performance impact its two big shareholders better known to Western investors, Yahoo and Softbank ? Will Alibaba’s business juggernaut in China pave the way for it to go global, and if so, what does that mean for rivals?
There’s also no shortage of financially important questions about the impact of Alibaba’s IPO on the Internet and mobile industries in China, either. The country has the world’s largest users of both and the industries have been on a consolidation tear. Will a cashed-up Alibaba keep buying other companies? How would a successful Alibaba IPO affect other Chinese big Internet IPOs in waiting, including JD.com? What’s ahead for shares in the various companies that Alibaba has been buying into of late? How would Alibaba’s success affect foreign Internet companies trying to enter China’s market?
And then last but perhaps not least, the wealth effect from the IPO could be remarkable. Careers among venture capitalists may be made on successful Alibaba bets. The company’s main founder, former English teacher Jack Ma, could have a shot at becoming China’s richest man. He wouldn’t be China’s first Internet tycoon to rank as the country’s richest — William Ding of NetEase and Robin Li of Baidu have previously held the top spot. Yet Ma’s climb could surpass Yang Huiyan as mainland China’s all-time richest member of a Forbes list at $16 billion.
Yet to me, having lived in China for the past decade and tracked Ma’s rise on our Forbes Rich Lists during that time, the biggest significance of this IPO isn’t so much in the numbers. After all, they’ll likely be big by any yardstick. Nor are you likely to learn for the first time that Alibaba’s listing highlights the country’s remarkable Web boom. Rather, the real meaning is that foreign investors are now willing to accept corporate governance standards and policy risks in China to the extent that country can today become home to world’s largest IPO, particularly one listed in a top capital market such as New York.
Alibaba is coming to market only a few years after Americans were shunning virtually all China IPOs amid a wave of governance problems and U.S. delistings. Alibaba itself has been said to provide services to companies that sell fakes. It holds a stake in China’s Twitter-like Weibo, which plays by government censorship rules and it does business with companies that are tied to the private interests of its chairman. Do investors accept that Alibaba will live up to international standards of good governance? Just after an out-of-the-blue government crackdown on foreign TV shows hurt U.S.-traded China Internet shares such as video site Youku, do investors still see the Internet policy landscape as stable enough to support a high Alibaba valuation?
To be sure, Alibaba embodies many good things about contemporary China. Ma is has become a billionaire in a country that has ended its Maoist madness and given scrappy entrepreneurs a lot more room to thrive. Alibaba has itself helped to empower vast numbers of entrepreneurs on its websites. Airport videos and books champion Ma’s leadership skills, and he is regarded as a hero among many Chinese. Alibaba itself is a window into a digital revolution that is transforming the world’s most populous country and the way it does business domestically and around the world.
So all of the tongues aflutter about Alibaba this week may be doing all of us a service. The world on the whole should give more thought to China’s rise in international business, the opportunities and risks involved, and the rules by which the country wants to play. If nothing else, here’s a company whose ambition is commensurate with China’s own on the world stage today. There’s plenty to be learned – if not money to be made – from following the discussions this month about Alibaba’s IPO.