Alibaba sets terms for $21.8b IPO

A total of 320.1 American Depositary Share (ADS) will be sold at $68 apiece, valuing Alibaba at $168 billion. The company initially set a range of $60-66 but upped it to $66-68 during the road show in response to strong demand from investors.

The offering represents a significant liquidity event for a string of private equity investors. Having committed a reported $300 million to Alibaba - it invested in 2011 as part of a consortium that paid $2 billion for a 5.7% stake and subsequently participated in a $7.6 billion debt and equity fundraising effort in 2012 - Silver Lake will hold a 2.2% interest worth around $3.7 billion post-IPO. It is selling 4.1 million shares in the offering, so will additionally realize cash proceeds of $278.8 million.

Yunfeng Capital - a private equity firm co-founded by Jack Ma, Alibaba's founder and chairman - also first invested in 2011 as part of the same consortium as Silver Lake. It is selling 6.5 million shares in the IPO for $442 million and will be left with a 1.1% stake worth $1.8 billion. CITIC Capital and Boyu Capital's holdings will be worth $1.3 billion and $840 million, respectively.

Affiliates of Asia Alternatives Management, Temasek Holdings-owned Pavilion Capital and Siguler Guff are also making partial exits and stand to secure substantial paper gains on their investments. Canada Pension Plan Investment Board is among the LP co-investors with a position in Alibaba, although this is not disclosed in the IPO prospectus.

The biggest seller is Yahoo, which is offloading 121.7 million shares for $8.3 billion and will retain a 16.3% interest in the company. Yahoo bought a 40% stake in Alibaba in 2005 for $1 billion plus Yahoo China assets. It sold and about half of its holding in 2013 for $7.6 billion in cash, shares and licensing payments.

Softbank, one of Alibaba's earliest backers - it put in $20 million in 2000 and has since re-upped a number of times - is not making a partial exit but its post-IPO holding will be worth $54.4 billion. Other significant investors include Ma and fellow co-founder Joe Tsai, who will have stakes of 7.8% and 3.2%, respectively, after the offering.

Alibaba is China's leading e-commerce player with platforms covering B2B, B2C and C2C. Its three retail marketplaces - Taobao, Tmall and Juhuasuan - generated a combined gross merchandise value of RMB1.5 trillion ($248 billion) from 231 million active buyers and 8 million active sellers in 2013. Alibaba recorded a net profit of $1.99 billion in the second quarter this year, while it posted of $2.54 billion in revenue, up 46.3% year-on-year.

Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley and Citigroup are acting as joint bookrunners for the offering.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Exits
• Technology
• Consumer
• Greater China
• TMT
• China
• Alibaba Group
• IPO
• Exit
• Silver Lake
• Boyu Capital
• CITIC Capital
• Consumer