PE-backed Alibaba confirms US listing
Private equity-backed Chinese e-commerce giant Alibaba Group has decided to go public in the US, ending months of speculation.
"Alibaba Group has decided to commence the process of an initial public offering in the United States," the company announced over the weekend.
"This will make us a more global company and enhance the company's transparency, as well as allow the company to continue to pursue our long-term vision and ideals. Should circumstances permit in the future, we will be constructive toward extending our public status in the China capital market in order to share our growth with the people of China."
According to Reuters, Alibaba is in discussions with Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs Group, J.P. Morgan, and Morgan Stanley for lead underwriting roles for the listing, which could reach $15 billion.
The company tried and failed to persuade Hong Kong regulators to approve its proposed shareholding structure. It wanted to use a bespoke structure whereby 28 partners, mainly senior executives, would be able to nominate a majority of the board members despite only holding a combined post-listing equity stake of around 10%.
Hong Kong operates under a "one share, one vote" system that favors majority shareholders. While Alibaba's proposal differed from the dual class share structure commonly used by technology companies in the US, it has broadly the same effect, allowing founders to retain board control despite diluting their shareholdings below a control threshold.
Jonathan Lu, Alibaba's CEO, said last October that the company would not be pursuing a listing in Hong Kong.
Alibaba was set up in 1999 and since become one of China's Big Three internet companies alongside Baidu and Tencent Holdings. With businesses including trading platform Alibaba.com, online shopping sites Taobao and Tmall and electronic payment system Alipay, the company dominates the B2B, C2C and B2C spaces, as well as controlling a major channel through which purchases are transacted.
The firm is backed by a string of private equity firms following an employee liquidity event in 2011 and a partial buyback from Yahoo in 2012.
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