19 January 2021

Alibaba IPO Filing: Anticipation, Risks, and Questions Abound

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‘Alibaba files for what may be biggest tech IPO’ 

Alibaba gave investors a closer look at the scale and growth of the Chinese e-commerce juggernaut in an initial public offering (IPO) prospectus filed on Tuesday, the first step in what could be the largest technology debut in history.

Alibaba Group Holding Ltd, which powers 80 percent of all online commerce in the world's second-largest economy, is expected to raise more than $15 billion, and could top the $16 billion pulled in by Facebook Inc when it listed in 2012.

The bulk of the proceeds will go to Yahoo Inc - which bought a 40 percent stake in Alibaba in 2005 for $1 billion and which must sell more than a third of its current 22.6 percent stake through the IPO. Alibaba also plans to sell new shares, people familiar with the plans have said, to bulk up a cash war chest depleted by a rash of recent acquisitions.

While the Alibaba brand is less well known in the United States than Internet companies such as Amazon.com and Facebook, the Chinese company's listing has stirred the most excitement in Silicon Valley and Wall Street since Facebook's record IPO. Alibaba will become the largest Chinese corporation to list in the U.S. - on either the New York Stock Exchange or the Nasdaq.

Click here for the full article from Reuters.

‘Investors Say Alibaba IPO Filing Leaves Many Questions Unanswered’ 

As Alibaba Group Holding Ltd. prepares for what might be one of the biggest initial public offerings in history, it faces the challenge of convincing investors it will be a good buy.

Some may need more prodding.

A number of investors and analysts said Wednesday that the more than 2,000 pages the Chinese e-commerce giant filed Tuesday leave many important questions unanswered. They include the individual performance of the major e-commerce platforms that make up the bulk of its revenue, details of the business of electronic-payment affiliate Alipay, its strategy for a string of pricey recent acquisitions, and plans for improving the way it delivers packages to Chinese customers.

Many investors are eagerly anticipating the offering because Alibaba holds an 80% share in the promising Chinese e-commerce market. The financial results disclosed Tuesday showed a fast-growing company with fat profit margins.

Click here for the full article in the Wall Street Journal.

‘The Risks of Investing in Alibaba’s I.P.O.’ 

The planned initial public offering of Alibaba, the Chinese e-commerce behemoth, has Wall Street buzzing. But investing in the tech behemoth carries a number of risks.

The prospectus for the I.P.O., which was filed on Tuesday, contains 38 pages outlining many of the risks that the company is disclosing to would-be investors. Such disclosures are fairly standard, intended to insulate companies from shareholder lawsuits if the investments go sour. But others are particular to Alibaba and reflect a different set of corporate governance standards than those at many American firms.

Among the many risks listed, prospective investors are warned about the Chinese government, Alibaba’s corporate structure and even the threat of a natural disaster.

A few of the notable risk factors outlined include:

* Because it is a foreign company, Alibaba plans to rely on exemptions from certain corporate governance requirements under the New York Stock Exchange and the Nasdaq. For example, the company said it was not required to have a majority of its board be independent, to have a compensation committee made up of independent directors or to adopt and disclose a code of ethics for directors and officers.

* Alibaba also said that it did not have to file reports and financial statements with the Securities and Exchange Commission “as frequently or as promptly” as American companies. “As a result, our shareholders may be afforded less protection than they would under the Exchange Act rules applicable to domestic U.S. companies,” the prospectus said.

Click here for the full article in the New York Times.

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