Alibaba: On the IPO Track?

by Tom Taulli | January 16, 2013 11:43 am

Founded about 14 years ago, Alibaba is still a privately held company. But that may change this year. According to Bloomberg[1], it looks like the giant Chinese e-commerce company has hired Credit Suisse (NYSE:CS[2]) and Goldman Sachs (NYSE:GS[3]) as lead investment bankers.

If there is an IPO, it will likely be on the Hong Kong exchange and could result in a capital raise of $3 billion to $4 billion, giving Alibaba a market cap over $40 billion. Yes, it would be in the Internet big leagues with companies like eBay (NASDAQ:EBAY[4]) and Facebook (NASDAQ:FB[5]).

Signs of IPO preparation are already popping up at Alibaba. Just yesterday, co-founder and CEO Jack Ma announced he will step down in early May[6] (he’ll take the role of executive chairman). It looks like he wants to bolster the senior management team.

The timing for a deal also appears good. Keep in mind that the Hang Seng index is up about 22% over the past six months. Besides, Alibaba is a top brand in China and has assets that span mega-markets like e-commerce, auctions and online payments. In fact, for the first nine months of 2012, revenues surged by 74% to $2.9 billion, and profits more than tripled to $781.7 million.

An IPO would also be good news for Yahoo (NASDAQ:YHOO[7]), which has a 20% stake in Alibaba. Perhaps this is one reason Yahoo’s shares have been rising lately, up 27% over the past six months.

Tom Taulli runs the InvestorPlace blog IPO Playbook[8], a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook[9]” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders[10].” Follow him on Twitter at @ttaulli[11]. As of this writing, he did not hold a position in any of the aforementioned securities.

Endnotes:
  1. Bloomberg: http://www.bloomberg.com/news/2013-01-16/alibaba-said-to-hire-credit-suisse-goldman-for-4-billion-ipo.html
  2. CS: http://studio-5.financialcontent.com/investplace/quote?Symbol=CS
  3. GS: http://studio-5.financialcontent.com/investplace/quote?Symbol=GS
  4. EBAY: http://studio-5.financialcontent.com/investplace/quote?Symbol=EBAY
  5. FB: http://studio-5.financialcontent.com/investplace/quote?Symbol=FB
  6. announced he will step down in early May: http://investorplace.com/ipo-playbook/alibaba-ceo-says-he-is-too-old-steps-down/
  7. YHOO: http://studio-5.financialcontent.com/investplace/quote?Symbol=YHOO
  8. IPO Playbook: http://investorplace.com/ipo-playbook/
  9. How to Create the Next Facebook: http://www.amazon.com/gp/product/1430246472/ref=s9_simh_gw_p14_d0_i1?pf_rd_m=ATVPDKIKX0DER&pf_rd_s=center-3&pf_rd_r=0GRB6ZMCTYDZVNG7Q7NV&pf_rd_t=101&pf_rd_p=470938811&pf_rd_i=507846
  10. High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders: http://goo.gl/pR2F3
  11. @ttaulli: https://twitter.com/ttaulli

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