Alibaba said it plans to raise $1 billion, but before it is priced later this year, that amount is likely to be far higher. Analysts expect Alibaba's IPO to surpass that of Facebook, which raised $16.4 billion in 2012, and be nearly as big as the 2008 offering by credit card giant Visa, which raised about $17.9 million.
Alibaba's registration statement was more than 2,300 pages long, but it was short on specifics regarding the IPO. The filing did not specify an offering price, what exchange American Depositary Shares would be listed on, even what stock symbol Alibaba would trade under. Still, the filing did shed light on the company's impressive business model and growth trajectory.
As of December, Alibaba had 231 million active monthly buyers, up 44% from a year earlier. For the nine months ended in December, Alibaba generated $6.5 billion in revenue and net income of $2.9 billion.
Alibaba's potential market capitalization has soared since 2012, when it was valued at less than $40 billion following a bond offering. Alibaba's growth potential was further underscored in Tuesday's registration statement. On-line shopping represented just under 8% of Chinese consumption in 2012. But that's projected to grow at an annual rate of 27% through 2016. Alibaba is also like to benefit from mushrooming Internet use. About 618 million Chinese - 46% of the country's population - used the Internet 2013. That's expected to rise to 790 million by 2016, Alibaba says.
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Started by former English teacher Jack Ma in 1999, Alibaba makes the bulk of its revenue as an Internet middleman, charging sellers for marketing and advertising. It's Alipay division is the world's largest payment processor.
Alibaba's IPO will creat! e a windfall for Yahoo, whose 24% Alibaba stake has helped bolster its share price under CEO Marissa Mayer.
Yahoo's decade-old investment in Alibaba has already paid off handsomely. The company acquired a 40% Alibaba stake for just $1 billion in October 2005. In 2012, Yahoo sold nearly half its Alibaba holdings for about $7 billion. Yahoo, which holds a 22.6% share in Alibaba, has said it plans to sell 10% of its stake, creating a potential windfall for shareholders or allowing the company to pursue acquisitions.
Analysts have valued Alibaba at upwards of $200 billion, meaning Yahoo's stake is worth nearly $50 billion.
Six investment banks are listed as IPO underwriters, including Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley and Citigroup.
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