Chinese e-commerce giant Alibaba Tuesday filed its much-anticipated plans to sell shares in what could be one of the biggest initial public offerings ever.
Alibaba said it plans to raise $ 1 billion, but before it is priced later this year, that amount is likely to be far higher. Analysts expect Alibaba’s IPO to surpass that of Facebook, which raised $ 16.4 billion in 2012, and be nearly as big as the 2008 offering by credit card giant Visa, which raised about $ 17.9 million.
Alibaba did not specify an offering price, what exchange American Depositary Shares would be listed on or what symbol shares would trade under. But it did reveal the company’s impressive business model and growth trajectory. As of December, Alibaba had 231 million active buyers, up 44% from a year earlier.
Alibaba’s IPO will create a windfall for Yahoo, whose 24% Alibaba stake has helped bolster its share price under CEO Marissa Mayer.
ASK MATT: How you can get a piece of Alibaba IPO
Started by former English teacher Jack Ma in 1999, Alibaba makes the bulk of its revenue as an Internet middleman, charging sellers for marketing and advertising. It’s Alipay division is the world’s largest payment processor.
Fourth-quarter sales jumped 66% to nearly $ 3.1 billion over the year-ago quarter, while net income more than doubled to $ 1.4 billion. For the nine months ended in December, Alibaba generated $ 6.5 billion in revenue and net income of $ 2.9 billion.
Alibaba’s potential market capitalization has soared since 2012, when it was valued at less than $ 40 billion following a bond offering. Part of that was underscored by research provided in Alibaba’s registration statement. The company says online shopping represented just under 8% of China consumption in 2012, but that’s projected to grow at an annual rate of more than 25% through 2016. Internet use in China is also expected to continue to mushroom. About 618 million Chinese – 46% of the country’s population – used the Internet 2013. That’s expected to rise to 790 million by 2016, Alibaba says.
Yahoo’s initial investment has already paid off handsomely. The company acquired a 40% Alibaba stake for just $ 1 billion in October 2005. In 2012, Yahoo sold nearly half its Alibaba holdings for about $ 7 billion and now holds a 22.6% stake.
Yahoo has said it plans to sell about 10% of its Alibaba holdings creating a potential windfall for shareholders or allowing the company to make acquisitions. Analysts have valued Alibaba at upwards of $ 200 billion, meaning Yahoo’s stake is worth nearly $ 50 billion.
Six investment banks are listed as IPO underwriters, including Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley and Citigroup.