Alibaba.com Raises $1.5 Billion in IPO

Sat Oct 27, 2007 5:54 AM EDT
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Alibaba.com Ltd., one of China's fastest-growing technology companies, reached its goal of raising $1.5 billion in its initial public offering Saturday, people close to the deal said.

Alibaba, an e-commerce portal, sold 858.9 million shares, or a 17 percent stake, at roughly $1.75 each, a source told Dow Jones Newswires on condition of anonymity.

The shares will debut on the Hong Kong stock market on Nov. 6.

The IPO price translates to a multiple of 55 times its forecast 2008 earnings, above the 34 times price-to-earnings ratio of Nasdaq-listed business-to-business search engine Global Sources Ltd., analysts said earlier. But the ratio is much lower than the 83 times price-to-earnings multiple of Chinese-language Internet-search provider Baidu.com Inc.

The IPO has drawn huge interest in Hong Kong, with the retail tranche of 128.83 million shares more than 250 times oversubscribed by Friday, newspaper reports said.

Alibaba drew $57.7 billion in orders for the retail shares — the largest in the territory's IPO history. The institutional tranche had locked up about $180 billion in subscriptions, The Standard reported, citing unnamed people involved in the deal.

The underwriters have an option to release an additional 113.67 million shares.

Analysts said surging demand for Alibaba and other shares had pushed up the local currency, prompting the monetary authority — Hong Kong's de facto central bank — to step in for the second time in a week to defend its peg to the U.S. dollar.

The monetary authority bought about $100 million on Friday when the U.S. currency reached about $1, the upper limit of the narrow range in which it trades against the greenback.

It sold a similar amount of Hong Kong dollars on Tuesday.

Alibaba Group founder, Jack Ma, has said proceeds from the IPO would be spent on acquisitions and development, designed to grow the company's business both in China and overseas.

Alibaba — whose Web sites allow 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 from 6 million in 2004 to 24.6 million in 2007. Paying members increased from 77,000 in 2004 to 255,000 by June 2007.

Yahoo! Inc., which holds a 39 percent stake in Alibaba's parent, Alibaba Group, had agreed to subscribe to about $100 million worth of shares.

Alibaba said another seven investors had agreed to take a stake, representing about $296 million, or 20 percent of the offering.

© 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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{"commentId":1134185,"authorDomain":"wolf-1"}
Wolfgang Leander

No doubt about it: Mr. Jack Ma is an extremely successful businessman, and he deserves a web celebrity status for having created Alibaba. The current IPO will enable the company to expand its business base internationally.

Reports from Hong Kong indicate that the transaction is going to be a very profitable deal for both Mr. Ma and the new shareholders, some 80% of them corporate investors such as the US web giant Yahoo!, Cisco Systems, and AIG Global Investments

This is all very exciting financial stuff... BUT - the new Alibaba stockholders and the media should also know this:

Jack Ma's Alibaba is not only China's biggest e-commerce firm but also the world's largest online shark fin trader. But the Yahoo! executives don't seem to mind. They already have a US-$ 1 billion stake in Alibaba representing a 40% shareholding, and, as reported, will soon increase their investment in the Chinese internet company by another 8-10%.

Activist groups, thousands of petitioning individuals from all over the world, media organizations have approached both Alibaba and Yahoo! to induce them to drop the shark fin trade. The reaction from them was utterly disappointing. While the Alibaba executives stated non-chalantly that they do not wish to "take sides" in the ongoing "controversy", Yahoo! sheepishly claimed that they are not in a position to interfere with the business policies of corporations in which they don't have a majority shareholding.

The fact of the matter is that both firms do not want to end the highly lucrative trade of shark fins. They blatantly ignore the well-founded conclusion of internationally renowned marine experts that the indiscriminate mass killing of sharks mostly for their fins, well over 100.000.000 animals per year, is driving many species toward extinction with catastrophic consequences for the biodiversity of the world's oceans.

By offering international shark fin dealers a convenient platform to do business Alibaba / Yahoo! are fueling the often illegal finning of sharks and, thus, actively and recklessly contribute to an environmental disaster they are very well aware of.

It should be known that shark finning is a most cruel and wasteful practice whereby fishermen slice off the fins from live animals and subsequently toss the finless sharks back to the sea where the face a slow, agonizing death.

The international pressure on Alibaba to stop trading shark fins will increase. Soon, Alibaba's Jack Ma and Ms. Decker of Yahoo! will have to realize that the firm's involvement in this highly unsavory business will severely damage its reputation, not only in the United States and Europe but wherever they have educated and informed clients.

Unfortunately, Mr. Ma does not seem to realize that it would be much better business for his company to adopt an environmentally responsible trade policy than to keep hawking shark body parts. The Chinese probably don't think that to ban the "finning" of sharks is an ecological matter of global urgency. They will soon have to find out that the rest of the world thinks differently.

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    Reply#1 - Sat Oct 27, 2007 1:18 PM EDT
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