Alibaba Group Holdings will to launch its IPO process in the U.S., skipping the Hong Kong stock exchange.
China’s Internet retail market leader’s move is a blow to the Hong Kong stock exchange which was initially the company’s preferred venue for the IPO.
Preferred U.S. listing
In a statement Sunday, Alibaba said it had decided to begin the U.S. IPO process, ending months of speculation about where it would go public.
The Chinese retail giant had been in discussions with the Hong Kong stock exchange and the Securities and Futures Commission since last year about a listing. However, the island city’s regulators blocked its proposal at it violated the ‘one-share-one-vote principle’.
Alibaba’s executive vice chairman Joe Tsai said last week that the firm would not change its partnership structure in order to list on the Hong Kong stock exchange.
However, in a statement, Alibaba said a future listing on the Hong Kong exchange would be considered “should circumstances permit”. The retail giant’s move would be a blow to the Hong Kong stock exchange which has not hosted an initial share sale worth over $4 billion since October 2010.
Largest IPO from Internet company?
It is rumored that Alibaba’s proposed IPO could be the largest for an Internet company, perhaps overtaking Facebook’s $16 billion floatation in 2012.
Alibaba’s two Chinese online shopping services, Taobao and TMall have reportedly clocked $163 billion of combined transaction value for the fiscal year ending March 31, 2013, exceeding the volume of the trade traffic going through US giants Amazon.com, Inc. (NASDAQ:AMZN) and eBay Inc (NASDAQ:EBAY) combined.
According to media reports, Credit Suisse Group AG (NYSE:CS), Deutsche Bank AG (NYSE:DB) (FRA:DBK) (ETR:DBK), Goldman Sachs Group Inc (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM), and Morgan Stanley (NYSE:MS) are expected to get equal billing for their jobs as co-lead underwriters of Alibaba’s IPO.
It is believed Alibaba is also planning to pay the banks about the same fee, which could be a break from recent large Internet IPOs including those of Facebook Inc (NASDAQ:FB) and Twitter Inc (NYSE:TWTR), which each paid one bank far more than the others that were named to senior roles.
As reported earlier, thanks to Hong Kong stock exchange’s ‘one-share-one-vote principle’, Alibaba is planning to list in the US as it would be possible for partners including Chinese entrepreneur Jack Ma to retain control over appointing board members. However, changing venues would involve much of the work that went into setting up the intended Hong Kong IPO has to be redone.