Jack Ma, chairman of Alibaba Group Holding Ltd., arrives for a meeting at the... Read More
China’s biggest e-commerce company is now offering the shares for $66 to $68 apiece, according to a regulatory filing yesterday, compared with an initial range of $60 to $66 each. The company and its backers including Yahoo! Inc. (YHOO) plan to offer 320.1 million shares.
Even at the higher price, Alibaba’s offering the shares at a price-to-earnings multiple that’s below what other publicly traded Chinese Internet peers fetch. Founder Jack Ma told prospective investors in Hong Kong yesterday that he won’t seek too high a
valuation, two people who attended the meeting said.
Alibaba’s IPO could top Agricultural Bank of China Ltd.’s more than $22 billion sale in 2010 as the world’s biggest. The size could increase further if Alibaba prices its shares above the range, which it can do without additional regulatory filings, or allows underwriters to sell more shares to help meet excess demand.
Shares of SoftBank Corp. (9984), Alibaba’s largest shareholder, rose as much as 4.6 percent in Tokyo trading to the highest since January.
Baidu, Tencent
Alibaba is now seeking a market value of as high as $167.6 billion, or about 29 times four analysts’ estimates for earnings in the year through March 2015, data compiled by Bloomberg show. Those analysts expect Alibaba’s net income to rise more than 50 percent this fiscal year from the previous twelve months.Baidu Inc., China’s biggest search engine, trades at about 34 times estimates of this year’s earnings, while Tencent Holdings Ltd., currently the largest publicly traded Chinese Internet company, trades at 37 times. Amazon.com Inc. fetches closer to 133 times forecast 2014 earnings.
Chinese Internet and e-commerce companies that trade in Hong Kong and New York currently fetch a median of 43 times estimated earnings, data compiled by Bloomberg show.
Alibaba and its advisers sifted through orders over the last few days to determine that there was enough demand to support a price increase, people with knowledge of the matter said earlier.
Tech Record
The company is on the second week of its global tour to meet with investors as it seeks to convince funds to buy into its offering. Alibaba plans to set a final price for the shares on Sept. 18, with trading to begin the next day.Over a lunch of smoked salmon, breaded chicken and mango pudding at Hong Kong’s Ritz-Carlton hotel, Ma fielded investor questions yesterday on the company’s partnership structure, management philosophy and how it will maintain profit margins amid rising competition, people who attended the meeting said.
Ma is seeking to avoid a repeat of Alibaba.com, which plummeted below its IPO price shortly after listing. He ended up delisting the company in 2012 at its IPO price.
Alibaba aims to be a global company and plans to expand its business in Europe, the U.S. and Asia, Ma told reporters before the investor luncheon.
The executives will meet investors in Singapore and London before returning to the U.S., according to a schedule obtained by Bloomberg news.
The company is seeking to list after valuations for technology shares rose to a 4 1/2-year high, data compiled by Bloomberg show. The Nasdaq Composite Index (CCMP) climbed to the highest since March 2000 on Sept. 2, while the Standard & Poor’s 500 Index hit a fresh record three days later and a gauge of Chinese stocks in the U.S. traded near a three-year high.
Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc. are managing the offering. Rothschild is serving as an independent IPO adviser to Alibaba. The company plans to list its shares on the New York Stock Exchange under the symbol BABA.
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