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Alibaba files for big US IPO; Indian SMEs among the top buyers on Alibaba.com

07 May, 2014

Chinese e-commerce giant Alibaba Group Holding Ltd has filed for its initial public offer (IPO), in what would be the biggest tech firm going public in the US after Facebook. Alibaba, which will apply for listing both on the NYSE and NASDAQ, has disclosed in its filing with the US Security and Exchange Commission (SEC) that it is looking to raise $1 billion but this number could grow up substantially as it is seen as a placeholder amount.

Earlier, there were reports that Alibaba is looking to raise $15 billion through the IPO. Last month, Carlos Kirjner, a senior analyst at asset management company AllianceBernstein Holding, had put a valuation of $245 billion for the firm after it posted strong results for the first quarter of FY14.

Alibaba is the largest online and mobile commerce company in the world in terms of gross merchandise volume (GMV) in 2013. It operates its ecosystem as a platform for third parties and do not engage in direct sales, compete with its merchants or hold inventory.

It runs Taobao Marketplace, China’s largest online shopping destination; Tmall, China’s largest third-party platform for brands and retailers and Juhuasuan, China’s most popular group buying marketplace by its monthly active users.

It also operates Alibaba.com, China’s largest global online wholesale marketplace, 1688.com, its China wholesale marketplace, and AliExpress, its global consumer marketplace.

Through its related company, Alipay, it offers payment and escrow services for buyers and sellers and has a platform approach to shipping and delivery by working with third-party logistics service providers through a central logistics information system operated by Zhejiang Cainiao Supply Chain Management Co., Ltd., or China Smart Logistics, its 48 per cent-owned affiliate. It also has investment in UCWeb, a developer and operator of mobile web browsers.

Here’s some nuggets from Alibaba’s prospectus:

GMV

Its three marketplaces generated a combined GMV of RMB1,542 billion ($248 billion) from 231 million active buyers and 8 million active sellers in the 12 months ended December 31, 2013. In the three months ended December 31, 2013, mobile GMV accounted for 19.7 per cent of GMV, up from 7.4 per cent in the same period in the previous year.

Users

The company has 231 million active annual buyers, 136 million mobile monthly active users, 3 million paying customer relationships, 8 million active sellers, 49 orders annually per active buyer and buyers across over 190 countries. 

Revenues

Its revenue is primarily generated from merchants through online marketing services (via Alimama, its proprietary online marketing platform), commissions on transactions and fees for online services. Alibaba also generates revenues through fees from memberships, value-added services and cloud computing services.

In the nine months period ended December 31, 2013, it generated revenue of RMB40.5 billion ($6.5 billion) and net income of RMB17.7 billion ($2.9 billion). The company whose fiscal year ends on March 31, drew bulk of its revenue from China commerce ($5.65 billion) followed by international commerce ($572 million), cloud computing ($90 million) and others ($192 million).

Buyers

Buyers on Alibaba.com are located in numerous countries all over the world, with the US, India and the UK being among the leading countries. This could mean that Indian SMEs are possibly the second most active buyers on Alibaba outside China. These buyers typically are engaged in import and export.

Ecosystem

Alipay processed payment volume of $519 billion for the 12 months ended December 31, 2013. Approximately 37.6 per cent of Alipay’s total payment volume in 2013 represented payments processed for its China retail marketplaces. It had over 620,000 marketing affiliates during the last quarter of 2013.

Key shareholders

Japan’s SoftBank is the top shareholder with 34.4 per cent stake followed by Yahoo with 22.6 per cent holding. Founder and chief Jack Ma owns 8.9 per cent and vice chairman Joseph Tsai has 3.6 per cent.

(Edited by Joby Puthuparampil Johnson)


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Alibaba files for big US IPO; Indian SMEs among the top buyers on Alibaba.com

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