Why Alibaba's IPO will be the biggest tech float in history
16 April 2014 2:22pm
Alibaba, the Chinese e-commerce giant, is on track to reach a $188bn (£111.9bn) market valuation when it floats on the US stock market in coming weeks and is expected to raise $16bn, making it the biggest technology float in history.
The debut, if it reaches IG’s grey market mid-point of trading, will surpass Facebook (which raised $16bn at a $104bn valuation) and Twitter (raised $2.1bn at a $14.2bn valuation), and would put it within reach of The Agricultural Bank of China’s biggest IPO ever in 2010 (raised $19.2bn at a $128bn valuation).
Why all the fuss about a company that sounds very similar to Amazon?
“The company is a mix between Amazon and eBay as it facilitates buyers and sellers of goods but without the auction model. It two biggest websites Taobao and Tmall account for than half all parcel deliveries in China and the transaction volume is larger than Amazon and eBay combined,” said Saxo Bank head of equity strategy Peter Garnry last month.
Last night's revelation that Alibaba’s revenue has soared 66 per cent in the last year to $3.1bn last quarter, and market expectations that Alibaba’s total sales for 2014 could reach $420bn, will further cement investor’s confidence in the firm. As does Alibaba’s dominant market position among China’s population of 1.4bn citizens, 300m of which are already Alibaba customers.
Foreign investors are desperate to invest in China’s internet growth story, and Alibaba’s IPO will give them a way of doing that.