Alibaba Group Holding Ltd. is now planning to list its shares in the
U.S., after talks with the Hong Kong stock exchange for an initial
public offering in the city broke down, said a person familiar with the
situation.
Alibaba's stock market debut could value the Chinese e-commerce company at $70 billion or more based on analyst estimates, making it the technology industry's largest IPO since Facebook's FB +2.60% offering last year, which valued the U.S. social network giant at about $100 billion. An Alibaba IPO would be much bigger than Twitter Inc.'s planned listing—the U.S. microblog's value is estimated at around $10 billion.
The loss of the IPO will be a big blow
to Hong Kong's stock exchange, which has struggled in the last couple of
years to regain its 2011 status of being the world's top venue for new
listings. Investment bankers in Hong Kong have also been pitching for a
role in the IPO, which could have been one of the city's biggest in
recent years.
Alibaba has yet to file its listing plan with the U.S., but the Chinese e-commerce giant has already hired a U.S. law firm to work on an IPO in New York, and it will likely hire banks soon, the person said.
Alibaba, which operates online marketplaces such as Taobao and Tmall, had been looking at either Hong Kong or New York as a possible listing venue. It wasn't clear why the talks with the Hong Kong exchange collapsed, but Alibaba had been talking to the city's bourse about setting up a structure to allow its "partners"—which include Alibaba founder Jack Ma and senior management—to maintain some control over the makeup of its board even after an IPO. Specifically, the 28 partners at the firm would nominate the majority of the board, and put that nomination up for a vote with the shareholders. Critics said that such a system would grant too much power to the partners, whose suggestions would rarely be rejected by shareholders.
In a letter to employees earlier this month, Mr. Ma explained why Alibaba's partners—including himself—needed to have the power to determine the company's future while keeping its long-term vision intact.
"We believe that only a group of people who are passionate about the company and are mission-driven will be able to protect the company from external pressure from competition and temptation to seek short-term gains," Mr. Ma said.
A spokeswoman at Hong Kong Exchanges & Clearing Ltd, 0388.HK -1.17% the operator of Hong Kong's stock exchange, declined to comment.
Alibaba's board nomination proposal had placed the Hong Kong exchange in a tough spot, as accepting the request would go against the bourse's oft-stated principle of treating all shareholders equally. Some critics urged the bourse to reject the proposal, saying that, if the exchange gave in, other prospective IPO candidates would also ask for special rights.
The person familiar with the situation declined to comment on how the talks ended—including whether the Hong Kong exchange clearly rejected the company's board nomination proposal—but said that Alibaba now plans to go public in the U.S.
Alibaba will opt for the same type of system of nominating the majority of its board, should it list in the U.S., the person familiar with the matter said, rather than adopting the dual-class voting system favored by many U.S.-listed technology companies like Facebook and Google Inc. A dual-class system allows a company to issue two classes of shares with different voting rights, giving founders and management greater weight in shareholder votes. Hong Kong, however, doesn't allow such a system.
According to the person, Alibaba believes that its proposed board nomination system can enable the company to determine its own long-term strategic direction while offering better protection of shareholder rights than a dual-class structure does.
SOURCE : http://online.wsj.com/article/SB10001424052702304526204579096381790891334.html
Alibaba's stock market debut could value the Chinese e-commerce company at $70 billion or more based on analyst estimates, making it the technology industry's largest IPO since Facebook's FB +2.60% offering last year, which valued the U.S. social network giant at about $100 billion. An Alibaba IPO would be much bigger than Twitter Inc.'s planned listing—the U.S. microblog's value is estimated at around $10 billion.
Reuters
Alibaba Group, China's largest e-commerce company, has given up on listing in Hong Kong and is moving toward a New York IPO.
Alibaba has yet to file its listing plan with the U.S., but the Chinese e-commerce giant has already hired a U.S. law firm to work on an IPO in New York, and it will likely hire banks soon, the person said.
Alibaba, which operates online marketplaces such as Taobao and Tmall, had been looking at either Hong Kong or New York as a possible listing venue. It wasn't clear why the talks with the Hong Kong exchange collapsed, but Alibaba had been talking to the city's bourse about setting up a structure to allow its "partners"—which include Alibaba founder Jack Ma and senior management—to maintain some control over the makeup of its board even after an IPO. Specifically, the 28 partners at the firm would nominate the majority of the board, and put that nomination up for a vote with the shareholders. Critics said that such a system would grant too much power to the partners, whose suggestions would rarely be rejected by shareholders.
In a letter to employees earlier this month, Mr. Ma explained why Alibaba's partners—including himself—needed to have the power to determine the company's future while keeping its long-term vision intact.
"We believe that only a group of people who are passionate about the company and are mission-driven will be able to protect the company from external pressure from competition and temptation to seek short-term gains," Mr. Ma said.
A spokeswoman at Hong Kong Exchanges & Clearing Ltd, 0388.HK -1.17% the operator of Hong Kong's stock exchange, declined to comment.
Alibaba's board nomination proposal had placed the Hong Kong exchange in a tough spot, as accepting the request would go against the bourse's oft-stated principle of treating all shareholders equally. Some critics urged the bourse to reject the proposal, saying that, if the exchange gave in, other prospective IPO candidates would also ask for special rights.
The person familiar with the situation declined to comment on how the talks ended—including whether the Hong Kong exchange clearly rejected the company's board nomination proposal—but said that Alibaba now plans to go public in the U.S.
Alibaba will opt for the same type of system of nominating the majority of its board, should it list in the U.S., the person familiar with the matter said, rather than adopting the dual-class voting system favored by many U.S.-listed technology companies like Facebook and Google Inc. A dual-class system allows a company to issue two classes of shares with different voting rights, giving founders and management greater weight in shareholder votes. Hong Kong, however, doesn't allow such a system.
According to the person, Alibaba believes that its proposed board nomination system can enable the company to determine its own long-term strategic direction while offering better protection of shareholder rights than a dual-class structure does.
SOURCE : http://online.wsj.com/article/SB10001424052702304526204579096381790891334.html
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