Financial News

  • 7 May 2014, 19:34

Alibaba Confirms New York Share Sale Plans

Chinese online powerhouse Alibaba, which makes more money than Amazon and eBay combined, has filed for a public share sale in the United States.

The flotation of the company, which incorporates a search engine, online shops and payment service platforms, as well as business-to-business web portals and cloud computing services, could be one of the biggest ever seen in the country.

The firm said its Initial Public Offering (IPO) in New York would seek to raise at least $1bn (£589m) but the figure was seen by analysts as a random sum given its ambitions.

Market experts believe the figure will more likely surpass the $16bn (£9.4bn) Facebook and its early investors raised two years ago.

Alibaba, a privately-owned firm, was started in 1999 with just $60,000 (£35,300) in the apartment of Jack Ma, a former English school teacher with no previous experience in business or technology.

Its growth matches that of China's own economy in terms of scale.

The company, which did not say whether it would use the New York Stock Exchange or the tech-based Nasdaq for the listing, enjoyed profits of $2.9bn (£1.7bn) on revenue of nearly $6.5bn (£3.8bn) through the first nine months of its last fiscal year ending in March.

That topped the combined earnings of $2.4bn (£1.4bn) posted during the same April-December stretch by eBay and Amazon.

A 40% investment by Yahoo! - since reduced to 26% - aided Alibaba's competitive position in China to the extent that eBay abandoned the country in 2006, just four years after breaking into its market.

Alibaba's success has provided a financial lifeline for Yahoo!, whose stake in the Chinese company is the main reason its own stock price has more than doubled in the past two years.

It is expected to sell more than 200 million shares at the time of the IPO - a core reason why many analysts believe the flotation will seek to raise close to the record $18bn (£10.6bn) enjoyed by Visa.

However, the timing of the listing will be seen as crucial, with several high profile IPOs falling flat in recent times amid pressure on tech stocks over fears some service-based firms are overvalued.

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