Residents Line Up for Alibaba.com IPO
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(AP) - Hong Kong residents eager to tap the territory's booming stock market lined up Tuesday for shares in Chinese e-commerce portal Alibaba.com after the company said its initial public offering would be the biggest Internet IPO since Google.
The company hopes to raise up to US$1.5 billion (euro1.06 billion) in the offering. The shares start trading Nov. 6.
"People who missed out on Google won't want to miss out on Alibaba," the company's charismatic founder Jack Ma, a former English teacher who set up the company in 1999, told reporters late Monday via videoconference from the United States.
Alibaba Group, the company that controls the business-to-business commerce Web site, said it plans to sell 858.9 million shares at an indicative price range of 12 to 13.50 Hong Kong dollars each, up from an earlier initial price of HK$10-HK$12.
The profits would help build a "world-class infrastructure and ecosystem for e-commerce, which will contribute to the sustained growth of the Chinese economy," Ma said.
Y.K. Chan, an analyst with Phillip Asset Management in Hong Kong, said the price is "very high," but that there is a lot of hot money in the Hong Kong market and investors are looking to buy new shares.
"A lot of people have been selling gradually as the market rose over the last few weeks, so they have a lot of liquidity," he said.
Hong Kong's benchmark Hang Seng Index has shot up about 30 percent since August when Beijing said it was considering a scheme that would allow mainland Chinese to invest in Hong Kong. Last Thursday, the index briefly topped 30,000 points for the first time.
Chan also said there is a lot of interest in technology shares, pointing to recent increases in the Nasdaq.
Alibaba.com _ whose Web site allows companies in China and overseas to trade with one another online _ is one of China's fastest growing Internet companies. It has seen its registered members soar from 6 million in 2004 to 24.6 million in 2007. Paying members increased from 77,000 in 2004 to 255,000 by June 2007.
The company recorded a net profit of 295.2 million Chinese yuan (US$39.2 million; euro27.5 million) in the six months ended June 2007. It expects its net profit to more than triple to 622 million yuan (US$83 million; euro58 million) from 219.9 million yuan, on strong growth in revenue from both its international and Chinese Web sites.
Unlike other offerings in which most of the shares on offer are newly issued shares, nearly three-quarters of the shares in the IPO are existing shares held by Alibaba.com's parent, Alibaba Group.
Net proceeds to Alibaba.com from the listing are expected to be about HK$2 billion (US$335 million; euro234.46 million), the company said, to be spent on strategic acquisitions and development initiatives to grow the company's business both in China and overseas.
The rest of the proceeds from the IPO will go to the Alibaba Group.
Strong demand from the public is expected to trigger an extra allocation of 113.67 million shares to raise a total of US$1.7 billion (euro1.19 billion). The company said Tuesday it will close the share sale two days early due to strong investor demand.
"People said buy, so I buy," said Lai Ah-yung, 65, as he picked up a prospectus and application form.
The share offering will represent about 17 percent of Alibaba.com's enlarged share capital. About 85 percent of the shares in the IPO are marked for institutional investors with the rest open to retail investors.
Yahoo! Inc., which holds a 39 percent stake in Alibaba.com's parent, Alibaba Group, has agreed to subscribe to about US$100 million worth of shares.
Alibaba said another seven "strategic" investors had agreed to take a stake, representing in total about HK$2.3 billion (US$296 million; euro207 million), or 20 percent of the offering.
They include Cisco Systems International BV., AIG Global Investment Corporation (Asia) Ltd., FoxConn (Far East) Ltd. and Industrial and Commercial Bank of China Ltd., as well as investment companies held by Wharf Holdings Ltd. Chairman Peter Woo, Malaysian tycoon Robert Kuok and the Kwok family of Sun Hung Kai Properties Ltd., the company said.