Chinese online retailer in biggest US public offering

Alibaba Group Holding, the e-commerce company started in 1999 with $60,000 by Jack Ma, yesterday cemented its status as a symbol of China’s economic emergence by raising $21.8bn (€16.9bn) in a US initial public offering.

Chinese online retailer in biggest US public offering

The company and shareholders, including Yahoo!, sold 320.1m shares for $68 each. The sale values Alibaba at $167.6bn, making it larger by market value than rival, as well as China’s Tencent Holdings.

The IPO is already the largest by any company in the US, and has the potential to break the global record — currently held by Agricultural Bank of China’s $22bn sale in 2010 — if underwriters issue more shares.

Ma, a former English teacher who started the company in his Hangzhou apartment, drew crowds of money managers to meetings held around the world as the company pitched

itself to investors this month. Alibaba has profited from China’s burgeoning consumer class by dominating the e-commerce industry in the country of 1.36bn people.

At recent meetings, Alibaba’s founder focused on the company’s ambitions outside of both the e-commerce field and its home base, describing it as an “internet company that happens to be from China.”

Alibaba made the support of big institutional investors a priority during the IPO, in an effort to put shares in the hands of long-term investors. Half of the shares sold went to just 25 accounts, a highly concentrated group in an IPO, sources said.

Alibaba’s ability to close a deal of this size is also owed to an almost non-stop rally in shares in the US — where about $15 trillion has been added to the value of equities amid three rounds of monetary stimulus from the Federal Reserve, an expanding economy and record profits.

Alibaba’s profits make it a standout among technology IPOs. Twitter raised more than $2bn last year, and Chinese rival, which has achieved a $40bn valuation, raised about $2bn in May — both without any annual earnings. Alibaba by comparison turns about half of its sales into income.

Alibaba itself will raise about $8.4bn from the sale, while another $867m of the proceeds will go to Ma.

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