Two important numbers are swirling around yesterday’s Alibaba IPO filing. The first — $1 billion — is the fundraising target Alibaba set in its F-1 filing.
The second — $20 billion — is how large Wall Street thinks that raise could become.
We’ll figure out just how close to either figure the Alibaba IPO will get a few months from now, when the company prepares for its roadshow. But if Alibaba is close to that latter number, the Alibaba IPO would be the biggest U.S.-listed initial public offering ever.
Now, that $20 billion is far from guaranteed. After all, the IPO market has been in a funk lately. Oh, and Chinese-based deals have also come under pressure, as seen with Weibo (WB). Regardless, Alibaba will still likely be on the top-10 list of the biggest IPOs (here’s my take on the deal).
OK, so what are the other companies on the list? Well, let’s take a look:
#10 Biggest IPO: Swisscom
Offering Date: 10/04/98
Amount: $5.6 billion
Swisscom, which was Switzerland’s largest telcom company, staged a solid IPO, which rose about 13% on the first day of trading. This was especially impressive since the world economy was experiencing major problems in late 1998 because of the implosion of the Long-Term Capital hedge fund and the financial crisis in Asia.
Even with the IPO, the Swiss government still retained majority control. Actually, its holding is currently at nearly 57%.
#9 Biggest IPO: Telstra
Offering Date: 11/17/97
Amount: $5.6 billion
Yes, this was yet another telecom IPO (1997 was a busy time for these types of deals). As for Telstra, it was the largest player in the Australian market.
While it was one of the biggest IPOs in history, it was also one that got little coverage (a quick Google search will show you why).
The IPO was part of a three-stage privatization of the company. Interestingly enough, the Australian kept a chunk of the stock in a trust for public pension payments.
#8 Biggest IPO: France Telecom
Offering Date: 10/17/97
Amount: $7.3 billion
The roots of France Telecom go back to the French Revolution of 1792 when the company developed a communications network. Ultimately, the operation would be owned by the French government.
But by 1997, there was a change of heart. That is, the French government wanted to gain access to the flood of IPO money! To this end, France Telecom went public.
But for shareholders, it became a nightmare. The reason: the disastrous purchase of British mobile company Orange. France Telecom paid too much for the company and the integration issues were enormous.
#7 Biggest IPO: Kraft Foods (KRFT)
Offering Date: 06/12/01
Amount: $8.7 billion
Kraft Foods (KRFT) was a spinoff of parent company Philip Morris (PM), which wanted to focus more on its core tobacco business. It was also a way to help shield Kraft from the potential liability exposure from massive lawsuits.
But the IPO was a snooze. On the debut, Kraft stock was unchanged. It did not seem to matter that it was the largest food business in the U.S., with mega brands like Oreos and Philadelphia cream cheese.
Kraft would engage in more dealmaking, such as with the purchase of Cadbury. Then in 2011 Kraft split into two publicly traded companies. The new operator was called Mondelēz International (MDLZ), which focused on the international business.
Biggest IPO #6: AT&T Wireless
Offering Date: 04/26/00
Amount: $10.6 billion
AT&T Wireless, which was a subsidiary of AT&T (T), went public at the peak of the dot-com boom. But it was not a typical dot-com debut. On the first day of trading, AT&T Wireless stock rose about 8% (then again, the company had the unfortunate ticker of AWE). To help boost demand, the company issued shares to about 60,000 employees.
At the time, the company was the No. 2 player in mobile phones and the market value was close to $70 billion. However, by 2004, AT&T Wireless agreed to a $41 billion buyout from Cingular, which created the US’s largest mobile phone provider. Of course, Cingular would go on to merge into AT&T.
Biggest IPO #5: Deutsche Telekom
Offering Date: 11/17/96
Amount: $13 Billion
At the time, Deutsche Telekom (DTEGY) was the world’s No. 3 telecom operator. But the response to the IPO was tepid, with the stock falling about 50 cents to $21.50 on its debut.
A big concern was the heavy debt load (about $64 billion, which came largely from building out the infrastructure in East Germany). At the same time, the competitive environment was getting intense and there was also a fight for mobile phone customers.
Although, the biggest problem for Deutsche Telekom would ultimately be the disruptive new technologies, such as Skype and even Facebook’s WhatsApp service. The result has been the erosion of once-lucrative fee businesses.
Biggest IPO #4: GM (GM)
Offering Date: 11/17/10
Amount: $15.8 Billion
Back in July 2009, GM (GM) filed for bankruptcy and received a $50 billion bailout from the U.S. Treasury. But a couple years later, the company got back on track and pulled off one of the biggest IPOs in history.
A key was the leadership of CEO Edward Whitacre (he departed several months before the IPO). He made tough choices with cost cutting and layoffs. But he also made major strategic moves, such as with partnerships in China.
The IPO paid back the U.S. and was also important for the company’s former employees. Consider that a major shareholder was a union-controlled trust fund, which administered medical expenses for retirees.
Biggest IPO #3: Facebook (FB)
Offering Date: 05/17/12
Amount: $16 Billion
Facebook’s (FB) was actually the largest tech IPO for U.S.-listed stocks. But it was also the largest one botched.
Because of computer glitches on the NASDAQ exchange, the FB stock suffered from a 30-minute delay. Worse, there were even long delays with trade confirmation. By the end of trading, FB stock was essentially unchanged.
But there were also issues with the company’s fundamentals. After all, FB was struggling with the transition to mobile and there were concerns that social media may not allow for effective advertising.
Yet all these concerns were overblown as Mark Zuckerberg swiftly restructured the company. The result: FB stock has gone on to gain about 54% since its IPO.
Biggest IPO #2: ENEL SpA
Offering Date: 11/01/99
Amount: $16.5 Billion
ENEL SpA may have had one of the biggest IPOs in history, but Wall Street didn’t care too much about the deal. By 2007, the company delisted from the NYSE.
ENEL, which was the largest power company in Italy, pulled off its IPO because of the need to pay off enormous debts. So why not take advantage of a hot market?
ENEL’s base included 29 million customers but the growth potential was certainly limited. For the most part, it proved pretty tough for the company to diversify into other businesses like water and telecommunications.
Biggest IPO #1: Visa (V)
Offering Date: 03/18/08
Amount: $17.9 Billion
Being the biggest IPO of all time could create issues for investors — might it be too big to post strong returns? That’s always a risk, but it certainly wasn’t a problem with Visa. The company priced the offering at $44, which was above the $37 to $42 range. Then, on the first day of trading, the stock spiked spiked another 28%.
True, the financial crisis was looming (a few days earlier, Bear Stearns nearly failed) — but this turned out to be a temporary speed bump. Visa stock would go on to post a return of 219%.
It certainly helped that the company was the leader of the fast-growing market for credit/debit transaction processing. At the time, Visa had 1.5 billion cards issued across the world, compared to only 916 for MasterCard (MA).
So, will the Alibaba IPO outshine Visa’s? We’ll just have to wait and see.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
