Alibaba Boosts Price for IPO

Chinese e-commerce portal Alibaba.com could raise up to $1.5 billion in its Hong Kong initial public offering next month, the company's parent said Monday.

Alibaba Group, the company that controls the business-to-business commerce Web site, said it plans to sell 858.9 million shares for an anticpated price of 12 to 13.50 Hong Kong dollars per share, up from an earlier estimated initial price of 10 to 12 Hong Kong dollars per share.

The shares represent a 17 percent stake in the company, and the latest estimated price would value the entire company at about $8.8 billion.

Alibaba's founder Jack Ma, a former English teacher who set up the company in 1999, told reporters the profits would help build a "world-class infrastructure and ecosystem for e-commerce, which will contribute to the sustained growth of the Chinese economy."

Ma was speaking by video phone from the United States where he is drumming up support for the IPO.

Alibaba — which allows companies in China and overseas to trade with one another online — is one of China's fastest growing Internet companies.

It has seen its registered members soar to 24.6 million from 6 million in 2004. Paying members increased to 255,000 by June from 77,000 in 2004.

The company earned 295.2 million Chinese yuan ($39.2 million) in the six months ended June 2007.

Nearly three-quarters of the shares in the IPO are currently held by Alibaba Group.

The U.S. Internet company Yahoo Inc., which holds a 39 percent stake in Alibaba Group, has already agreed to subscribe to about $100 million worth of shares.

Alibaba said another seven "strategic" investors had agreed to take a stake, representing in total about 2.3 billion Hong Kong dollars ($296 million), or 20 percent of the offering.

They include Cisco Systems International B.V., AIG Global Investment Corporation (Asia) Ltd., FoxConn (Far East) Ltd. and Industrial and Commercial Bank of China Ltd., as well as investment companies held by Wharf Holdings Ltd. Chairman Peter Woo, Malaysian tycoon Robert Kuok and the Kwok family of Sun Hung Kai Properties Ltd., the company said.

About 85 percent of the shares are marked for institutional investors with the rest open to retail investors.

Already, the shares are in high demand, with the South China Morning Post newspaper reporting the institutional tranche was already 50 percent subscribed before the price was raised.

Strong demand from the public is expected to trigger an extra allocation of 113.67 million shares to raise a total of $1.7 billion.

Net proceeds from the listing were expected to be spent on strategic acquisitions and development initiatives to increase its business in China and overseas.

Shares of the company, which claims to be the largest business-to-business e-trading site in China, will begin trading on Nov. 6.

Back To Top