Alibaba Kicks Off Asia Roadshow in HK

17-Sep-2014 Intellasia | WSJ | 6:00 AM Print This Post

Alibaba Group kicked off its Asia roadshow Monday in Hong Kong as the Chinese e-commerce giant continues its two-week campaign to pitch its stock to potential shareholders in a US initial public offering that could raise as much as $24 billion.

Speaking ahead of a luncheon with institutional investors at the glitzy Ritz Carlton hotel in Hong Kong, Executive Chair and Founder Jack Ma told a crowd of journalists that Alibaba plans to expand into the US and Europe markets aggressively after its IPO.

Alibaba decided to list in New York instead of Hong Kong because the Hong Kong exchange refused to accept its so-called “partnership” structure, which allows Ma and other executives to nominate more than half of Alibaba’s board.

“We missed the great opportunity to list in Hong Kong. I speak from my heart. I love Hong Kong,” Ma said.

Other executives present at the luncheon were Chief Executive Jonathan Lu, Executive vice Chair Joe Tsai as well as Daniel Zhang, chief operating officer and Maggie Wu, chief financial officer.

After a week of investors’ meetings that kicked off in New York last Monday, Alibaba already has sufficient demand to complete the deal in the current price range $60-$66 per share, people familiar with the matter say. As investors place orders for more stock than bankers expected to receive, bankers and Alibaba decided Friday to close order books on Tuesday for some US investors and Wednesday for investors based in Asia and Europe, people familiar with the situation said earlier.

Key questions on investors’ minds are whether Alibaba might raise its price range or increase the size of the deal. Investors are also keen to hear more about Alibaba’s future growth strategy.

“Our top concern is Alibaba’s acquisition strategy and how the new investments will accelerate its future growth amid intensifying competition in China’s mobile Internet market,” said an investment manager at an Australian pension fund, who declined to be named.

Another key concern among Asia-based investors is Alibaba’s relationship with its Alipay affiliate, which processes the transactions that are conducted through Alibaba’s myriad online marketplaces. Alibaba founder Jack Ma has addressed the company’s separation of Alipay from the broader Alibaba Group in 2011 at its roadshow in New York last week. The move sparked a conflict with Alibaba’s major shareholder Yahoo Inc., and has elicited some criticism from investors. Ma said it was one of the toughest calls he has had to make, but he said he believed it was the best move for the company in the long-term.

After Hong Kong, the next stop for Alibaba executives is Singapore, where they will host a lunch event and meetings with smaller groups of investors Tuesday.

Alibaba is expected to set the price and sell stock to select investors Thursday. The following day, shares are to begin trading on the New York Stock Exchange under the symbol BABA.

Alibaba’s market debut will be one of the largest IPOs in US history. At the midpoint of the current IPO price range, Alibaba would have a market value of $162 billion including options grants and other restricted shares.

Hangzhou-based Alibaba, founded in 1999, operates Taobao and Tmall online marketplaces, which have hundreds of millions of users in China. Transactions handled by Taobao and Tmall last year amounted to $248 billion, larger than the figures for Amazon.com Inc. and eBay Inc. combined.

Investors see a lot of potential growth in Alibaba’s earnings, as China’s e-commerce market continues to expand. In the quarter ended June 30, Alibaba’s revenue rose 46 percent from a year earlier to $2.5 billion. Its net profit for the quarter surged to $2 billion from $705 million a year earlier, but that was due largely to a one-time investment gain as a result of recent acquisitions. While Alibaba doesn’t sell products itself, the company earns most of its revenue through advertising fees and commissions paid by merchants who use its marketplaces.

http://blogs.wsj.com/digits/2014/09/14/alibaba-kicks-off-asia-roadshow-in-hong-kong/

 


Category: Hong Kong

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