Alibaba’s long-awaited $200bn float looks set to be a game of two halves. On the one hand we have one of the largest technology floats of all time as the firm looks to raise $21bn from the public market.
The float will prompt some of the highest legal fees of the last decade, and undoubtedly lead to some of the highest fees for the investment banks attached to it.
It will give US and Western investors the opportunity to invest in China’s internet growth story, something they have been desperate to wade into. Alibaba’s IPO will give them a chance to do just that.
On the other hand, as investors spend more time delving into the Chinese market they’re beginning to see the risks, as well as the rewards.
From the differences in the financial reporting of Chinese firms to the complexities of the regulatory and legal system in the region, retail investors are apparently looking at these factors and treating Alibaba with far more trepidation than Facebook or Twitter saw.
In the end Alibaba will act as a bellwether for foreign investors’ confidence in the region. We’ll just have to wait and see if Alibaba’s investment case is strong enough to outweigh the market’s fears and deliver on China’s promise.