Chinese Internet juggernaut, Alibaba.com Limited (HKG:1688), is likely to come up with its much anticipated IPO, claims a report from Kara Swisher of AllThingsD (who has incredible sources, especially at Yahoo).
In the recent loosely-sourced report, a circular referred to the Chinese site on a leaked note that purportedly said the planning would begin in the second half of 2013 for a public offering in the end of 2013 or early 2014.
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However according to a source, who is close and familiar with the situation, this would not take place as fast as expected, but incentives in the latest stock buyback with major shareholder Yahoo! Inc. (NASDAQ:YHOO) could be the reason behind a public offering towards the end of 2015.
The sources said that the mentioned time frame is not a deadline, and there are no plans as such to do it any soon. However, Alibaba will rake in benefits if it issues the Initial Public offerings towards the end of 2015, but the sources said that the issue will wholly depend on market timing.
The news is of utmost importance to Yahoo because much of the valuations of the company are done on the basis of 22 percent stake which it still holds in Alibaba.
As Alibaba noted at the time of that deal:
“Under the terms of the agreement with Yahoo!, Alibaba Group has the right to repurchase one-half of Yahoo!’s remaining stake upon a qualifying initial public offering in the future. Yahoo! originally acquired its stake in Alibaba Group in 2005 in exchange for US$1 billion and sale of its Yahoo! China business to Alibaba Group.”
After this development, the value of Alibaba.com Limited (HKG:1688) has shot up dramatically, and it has performed strikingly better in its various units, including e-commerce giant Taobao.
During the stock buyback with Yahoo!, Alibaba’s value was $40 billion, and which according to some will surge strongly over the next few years. However, this cannot be guaranteed, and it hinges on how Alibaba’s business in China and elsewhere turns out to be.
Although it is clear that Alibaba will in due course issue its IPO, sources familiar and close to the situation maintain that the management is not in any rush, particularly with a fresh incursion of capital from investors such as Silver Lake, DST Global, Temasek and Yunfeng Fund.
“So many rumors have been floated on this IPO and we can expect a lot more until it actually happens,” one source said.
Yahoo! Inc. (NASDAQ:YHOO) finished the sale of half its stake in Alibaba.com Limited (HKG:1688) earlier this year for $7.6 billion, totaling the Silicon Valley Internet giant about $4.5 billion. Most of what Yahoo! received is being utilized in the repurchase of shares.