Tiger Global Management recently purchased $200 million worth of shares of Alibaba Group through a secondary market. The valuation of the Chinese e-commerce giant is estimated to be around $125 billion after the hedge fund’s investment. Tiger Global Management, the hedge fund seeded by legendary investor Julian Robertson and managed by Chase Coleman, acquired a stake in Alibaba Group, the largest e-commerce company in China prior to its initial public offering (IPO) in the United States, based on information from sources familiar with the matter.
One of the sources said Tiger Global Management purchased $200 million worth of shares of Alibaba Group, increasing the firm’s valuation to $125 billion. The Chinese e-commerce giant is planning to trade on the New York Stock Exchange (NYSE). Yahoo! Inc (NASDAQ:YHOO) owns 24% stake in Alibaba Group.
The report indicated that Tiger Global Management bought its stake in Alibaba Grough through a secondary market, which handles the sale or trading of equities or assets between investors of private or pre-IPO companies. A transaction is made between investors and employees of the company through an official tender offer.
According to two people familiar with the transaction, Tiger Global Management acquired its stake in the Chinese e-commerce giant from other investors. The hedge fund had been investing in technology companies. During the third quarter last year, it acquired 8 million shares of Yahoo! Inc. (NASDAQ:YHOO) worth more than $265 million and 5.25 million shares of Intel Corporation (NASDAQ:INTC) worth over $120.33 million.
Tiger Global Management has long-term investment vehicles that support private technology companies including Eventbrite, Nextdoor and Warby Parker. Lee Fixel and Scott Shleifer manage the hedge fund’s long-term investment funds. Shleifer is apparently the driving force behind Tiger Global’s investment in Alibaba Group.
Secondary market investors becoming very interested
Mark Mahaney, analyst at RBC Capital Markets, increased his estimate on the valuation of Alibaba Group from $110 billion to $150 billion in December. Wall Street analysts are projecting an IPO in the latter part of 2014 or early 2015.
Social Internet Fund Managing Partner, Loo Kerner described Alibaba Group as an amazing company preparing for an IPO, which is the reason why secondary market investors are very interested.
Eric Jackson of Ironfire Capital opined that Alibaba Group and its bankers will probably choose a conservative valuation for its IPO. He believes that stock will rally once it starts trading, and estimated its valuation to reach as much as $190 billion. Jackson said, “I’m very bullish on what the valuation will be. It’s a large business compared to Amazon and eBay, growing quickly and much more profitable than those companies.”
