Chinese e-commerce giant Alibaba Group Holding Ltd, the world's largest e-com firm by value of goods sold online, is seeking to raise up to $21.1 billion in its initial public offer (IPO) through issue of American Depository Receipts (ADR), it disclosed on Friday. The firm has kept additional shares as underwriters portion which could fetch another $3.16 billion in the issue.
Over half of the issue proceeds would go to its selling shareholders including founder and chief Jack Ma besides strategic investor Yahoo, the filing showed. These existing shareholders would get $13 billion from the issue, which would value Alibaba at $162.2 billion at the upper end of the price band of $60-66 per ADS.
In contrast, Amazon Inc has a market cap of $159.8 billion.
Earlier, there were reports that Alibaba is looking to raise $15 billion through the IPO and Carlos Kirjner, a senior analyst at asset management company Alliance Bernstein Holding, had put a valuation of $245 billion for the firm after it posted strong results for the first quarter of FY14.
The company estimates that it will receive net proceeds of approximately $7.6 billion after deducting estimated underwriting discounts and commissions and the estimated offering expenses based upon an assumed IPO price of $63 per ADS (the mid-point of the estimated range of the issue offering.
It has not detailed the expenditure plan but said it currently intends to use the net proceeds from this offering outside of China, and do not expect to transfer such funds into China.
Alibaba is the largest online and mobile commerce company in the world in terms of gross merchandise volume (GMV). 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:
Its three marketplaces generated a combined GMV of $296 billion from 279 million active buyers in the 12 months ended June 30, 2014. In the three months ended June 30, 2014, mobile GMV accounted for 32.8 per cent of GMV.
The company has 279 million active annual buyers, 188 million mobile monthly active users, 8.5 million active sellers, 52 orders annually per active buyer and buyers across over 190 countries.,
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.
Its total revenue increased by 52.1 per cent to $8.46 billion in fiscal year ended March 31, 2014. The total revenue increased by 46.3 per cent in the three months ended June 30, 2014 to $2.54 billion over the year-ago period. The net income increased by 170.6 per cent to $3.77 billion) in fiscal year 2014 while it grew 179.6 per cent to $2 billion) in Q1 FY15. For the three months ended June 30, 2014, its net income included a net gain of $1 billion from step-up acquisitions arising from revaluations of previously held equity interest.
The company drew bulk of its revenue from China commerce ($2.15 billion) followed by international commerce ($237 million), cloud computing ($38 million) and others ($115 million) in the first quarter ended June 30, 2014.
Alipay processed payment volume of $778 billion for the 12 months ended June 30, 2014.
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.
Japan’s SoftBank is the top shareholder with 34.1 per cent stake followed by Yahoo with 22.4per cent holding. Founder and chief Jack Ma owns 8.8 per cent while co-founder and vice chairman Joseph Tsai has 3.6 per cent.
Yahoo will encash up to $8 billion from the issue and its holding will shrink to 16.3 per cent post issue. Jack Ma will get up to $842 million from selling some of his shares and post IPO will own 7.8 per cent stake.
SoftBank, which is not selling any shares, will remain the single largest shareholder with 32.4 per cent holding post issue.