There’s a blockbuster deal coming down the pipeline that’s predicted to be so earth shattering, it’ll make the Facebook IPO look like child’s play…
The buzz has been absolutely deafening of late.
Though it’s been talked about as far back as 2011, it was only when China’s e-commerce darling Alibaba announced in 2012 that it would buy back a significant portion of its shares from its majority stakeholder Yahoo! (NASDAQ:YHOO) — that the plans for its monster IPO became apparent
As Jack Ma, Alibaba Chairman and CEO remarked at the time, ” The transaction will establish a balanced ownership structure that enables Alibaba to take our business to the next level as a public company in the future.”
And of course, as soon as Mr. Ma uttered the word “public”, the hype began to swirl immediately around the company that he started in 1998.
What began as an online marketplace for small to medium-sized companies has pretty well stayed true to that vision ever since — though the business has grown by epic proportions.
In 2011, the market value of Alibaba stood at roughly $4.2 billion. A year later, a round of fundraising pegged the valuation at around $35 billion.
But that figure has ballooned even larger thanks to Alibaba’s online assets, including Taobao.com, Tmall.com, and Aliexpress.com, which together account for over 50% of all online sales in China.
Capturing even a tiny portion of those buyers is rewarding enough. Alibaba has instead become the undisputed emperor of e-commerce in the Middle Kingdom.
Market research firm McKinsey & Co. reported that the Chinese e-commerce market was worth $210 billion. By 2020, it’s expected to double.
At that pace, their market size will equal that of the US, Japan, UK, Germany, and France combined today.
And talk about a tide that lifts all boats…
The hype surrounding Alibaba has indirectly drawn some free publicity to other Chinese companies already trying to grow their presence in the US markets.
From Google-equivalent Baidu (NASDAQ:BIDU), to fellow e-commerce competitor Vipshop (NYSE:VIPS), to rival e-tailer JD.com who just filed for the largest Chinese IPO to date on January 30th for $1.5 billion, all of them can give Alibaba a nod of appreciation for the leg-up.
As for Alibaba, its IPO anticipation has hit a fever pitch after the Company posted its fourth straight quarterly profit gain in late January.
The estimated price tag when it does finally go public has spiked to as high as $200 billion.
If the offering was to happen right this moment, analysts predict it would be more in the $140 – $150 billion range.
Either way, it could easily eclipse that of Facebook’s 2012 IPO, which raised $16 billion with a $104 billion valuation.
In fact, it could potentially land somewhere within the top 5 IPOs of all time, right alongside Visa’s $19.7 billion and General Motor’s $18.15 billion.
It’s no wonder why stock exchanges around the world are courting Alibaba to list on their exchanges.
Already, Alibaba has declared its intentions not to park its stock in Asia after the Hong Kong Stock Exchange rejected the Company’s shareholder structure last summer. And the London Stock Exchange has conceded that they are not the frontrunners.
This likely leaves us with America’s two biggest bourses: NYSE and NASDAQ.
With millions of dollars in potential fees being paid out to bankers, brokers, and attorneys to orchestrate the massive deal, one can be sure that both of these exchanges are pulling out all the stops to try and lure Alibaba’s business.
So while Hong Kong gave them the cold shoulder, both NYSE and NASDAQ are welcoming Alibaba with little hesitation. In October, the two exchanges issued separate written letters to the Company to approve of their shareholder structure.
After scaring investors with its Facebook listing debacle and then losing Twitter to the NYSE, the NASDAQ could sure use a big IPO right now – but it’s anybody’s game at this point.
The kow-tow’ing to the next big tech stock has only just begun.
Prepare to get in line.
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