Alibaba to begin process for IPO in US

Alibaba Group Holding Ltd, China’s biggest e-commerce company, will begin the process of filing for an initial public offering in the US that may be the biggest since Facebook.

The announcement comes after Alibaba struggled to persuade Hong Kong regulators to approve a proposed governance structure that would allow its partners to nominate a majority of its board of directors.

A listing in China may be considered “should circumstances permit in the future,” the Hangzhou- based company said in an e-mailed statement.

Investment banks have valued Alibaba, founded by former English teacher Jack Ma, at as much as $200 billion (€144bn), which would make it the second-biggest internet company behind Google Inc, based on market capitalisation.

A US share sale by Alibaba would be a blow to Hong Kong, which hasn’t hosted an IPO of more than $4bn since October 2010.

“Alibaba’s preference to keep its partnership structure is probably the biggest reason why it chose to list in the US,” Stephen Yang, a Hong Kong-based analyst at Sun Hung Kai Financial Ltd said yesterday. “The US has more investors and analysts in the technology space.”

Alibaba plans to work with Credit Suisse Group, Deutsche Bank, Goldman Sachs Group Inc, JPMorgan Chase & Co, Morgan Stanley and Citigroup Inc, according to a person familiar with the matter. The company hasn’t signed official contracts with the banks for the initial public offering, the person said.

Representatives of Goldman Sachs, JPMorgan and Credit Suisse declined to comment. Spokesmen for Citigroup, Morgan Stanley and Deutsche Bank weren’t immediately available to comment.

Alibaba hasn’t decided when to file for the listing, how much it plans to raise, how large a stake it may sell or which exchange in the US it would seek to list on, according to the person familiar with the matter.

“This will make us a more global company and enhance the company’s transparency,” Alibaba said in the statement. “We respect the viewpoints and policies of Hong Kong.”

The prospectus for an initial public offering may be disclosed as soon as April, people familiar with the matter have said.

The company is also working with New York- based law firm Simpson Thacher & Bartlett LLP.

An Alibaba IPO could raise about HK$100bn (€9.26bn), Ernst & Young LLP has said, making it the world’s biggest first- time share offering since Facebook raised $16bn in May 2013.