Chinese Online Giant Alibaba Eyes New York Stock Exchange for IPO (Report)
Chinese e-commerce giant, Alibaba, has stepped away from negotiations with the Hong Kong Stock Exchange for its much-anticipated IPO. The company is instead preparing for a listing in New York, according to unnamed sources cited by the Wall Street Journal.
The Alibaba IPO is expected to value the company at approximately $70 billion, making it the largest tech industry debut since Facebook’s troubled listing last year.
The company’s core business is e-commerce -- an area it dominates in China -- with its online marketplaces, Taobao and Tmall, roughly akin to the Chinese version of e-bay.
Over the past year the company has expanded its scope, taking an 18 percent stake in leading Chinese social media firm, Sina Weibo, and moving towards buying streaming video service PPTV with partner Hunan TV. The company paid $586 million for its slice of Sina Weibo and has the right to raise its stake to 30 percent at a later date. The PPTV deal still remains unconfirmed, but the most recent reports had Alibaba closing in on paying $400 million for the site.
Last May, Alibaba bought back roughly half of a 40 percent stake Yahoo was holding in the company. Yahoo’s remaining stake in Alibaba is viewed by analysts as one of its most valuable assets.
According to the Journal, Alibaba had been negotiating with the Hong Kong Stock exchange and local regulators to allow the company's billionaire founder, Jack Ma, and senior management to maintain control over the makeup of its board. The Hong Kong exchange doesn't allow a so-called “dual-class structure,” however, and the company pivoted towards New York, where that model is the one favored by U.S.-listed tech companies, such as Google and Facebook. In the dual-class system, a company issues two categories of stock with founders and senior management getting shares that give them greater voting power in shareholder votes.
According to the Journal’s sources, Alibaba has already contracted a U.S. law firm to work on the IPO in New York and will soon hire investment banks.