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One of the largest companies in China is about to go public on a U.S. exchange.
Alibaba, China’s leading e-commerce company, has shunned the Hong Kong exchange in favor of the New York Stock Exchange. That’s a coup for the NYSE – not to mention the five or six banks (the list has not been finalized) planning to underwrite the Alibaba IPO.
The Alibaba IPO should be the largest initial public offering since Facebook (Nasdaq: FB) went public two years ago. In fact, it seems destined to become one of the five largest IPOs in U.S. history. Facebook raised $16 billion in its May 2012 IPO, making it the third-largest offering in U.S. history. Some analysts are already predicting that Alibaba’s IPO will surpass Facebook’s offering.
Other Big Numbers Surrounding the Alibaba IPO
150 billion: That’s how much online merchandise, in dollars, Alibaba sold last year – more than Amazon (Nasdaq: AMZN) and eBay (Nasdaq: EBAY) combined. Alibaba’s platforms account for 80% of China’s e-commerce.
24: Percent ownership Yahoo! (Nasdaq: YHOO) has in Alibaba. The two sides closed the $7.6 billion deal in September 2012. Not surprisingly, Yahoo is benefiting from today’s announcement that Alibaba plans to go public on a U.S. exchange. Shares were up more than 4% in mid-day trading. And with good reason: Yahoo stands to gain $15 billion from the Alibaba IPO, analysts say.
51: Because it’s still a private company, Alibaba’s financials are kept under wraps. But Yahoo’s performance offers a glimpse into Alibaba’s books. And last quarter, the Alibaba portion of Yahoo’s revenue grew by 51% from a year earlier. That was actually down from the previous two quarters, when growth in Yahoo’s Alibaba sales was 61% and 71%, respectively.
140 billion: That’s the projected market value of Alibaba. Should the company debut at that level, it would instantly be one of the 35 largest stocks on a U.S. exchange.
It’s too early to tell when Alibaba’s IPO date might be. But it will certainly come in 2014.
Who knows if it will make for a good investment. After all, Facebook fell flat after its much-hyped IPO, and took more than a year to recover. But the Alibaba IPO will be big money, and companies from Yahoo to JPMorgan Chase (NYSE: JPM) – one of the purported underwriters – should make a killing once it goes public.