The long-anticipated share sale will give Alibaba greater access to the US market at a time when it has been aggressively buying up rival businesses at home and analysts speculate it is looking to grow its Western business.
Founded in 1999 by Jack Ma, a former English teacher, analysts have estimated the entire company could be worth as much as $200bn, more than Amazon, eBay or Facebook.
The business started as a site connecting Chinese suppliers with Western buyers. It now controls three virtual marketplaces that account for roughly 80% of online shopping in China's 1.84tn yuan ($296bn) market, according to research firm iResearch.
Yahoo owns a 24% stake in Alibaba – a stake that analyst PrivCO calculates is worth at least $42bn – more than Yahoo itself. “This will most likely be the largest tech IPO (initial public offer) ever,” said Matt Turlip, analyst at PrivCo.
Turlip said the Chinese firm had been on an acquisition spree in China buying and taking stakes in firms including Youku Tudou, China’s YouTube, Weibo, the micro-blogging site, and ChinaVision, a television-and-film production firm, among others. “They’ve also been making investments in the US. They clearly want to get their foot in the door here and will want to expand beyond China at some point. That’s inevitable. It’s a matter of when.”
The IPO is likely larger than Facebook, the current holder, and would launch the Chinese company into the top ranks of US-listed tech firms.
Ma is the face of one of China’s top three tech companies, the others being search engine company Baidu and the media and gaming conglomerate Tencent. Before Alibaba he founded China Yellowpages, believed to be the country’s first internet company.
He started Alibaba with $60,000 borrowed from 80 people and his enormous success has made him a star in China where he is the subject of bestselling biographies and motivational videos. Ma is the biggest individual shareholder, owning 8.9% of the stock – a fortune worth $17.8bn if Alibaba is valued at $200bn. Longtime lieutenant Joseph Tsai owns 3.6%, worth $7.2bn at $200bn valuation.
The biggest outside investors are SoftBank, the Japanese telecom giant, with a 34.4% stake, and Yahoo.
According to Tuesday’s filing in the 12 months ended December 31, Alibaba's three marketplaces – Taobao, Tmall and Juhuasuan – had 231 million active buyers and 8 million active sellers and generated $248bn-worth of transactions.
The filing said Alibaba planned to raise $1bn in the IPO, although with months to go before the sale that figure is likely to rise once the company gets a better sense of investor appetite. Facebook raised $16bn in its IPO in May 2012.
Alibaba will offer investors, already enamoured of tech firms, a chance to invest in China’s enormous and fast-growing market. But the company is still little known in the west and its complex series of holdings may prove unpalatable for some investors.
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