Alibaba to launch IPO in the US

Hong Kong regulation prompts online retailer to become the latest Chinese company to focus on US offering

Chinese e-commerce giant Alibaba has announced plans to list shares in the US in what may be the biggest initial public offering since Facebook.

The online retailer says it has abandoned plans to pursue an IPO in Hong Kong, which would have given a boost to the city’s burgeoning market, after lengthy negotiations over Alibaba’s board structure. It intends to have its partners retain control over a majority of board seats – something that is prohibited in Hong Kong.

‘Alibaba Group has decided to commence the process of an IPO in the US,’ the company says in a media statement. ‘This will make us a more global company and enhance the company’s transparency, as well as allow the company to continue to pursue our long-term vision and ideals.’

The retailer gave no details as to the size or date of the IPO but the Financial Times, citing unnamed sources, reports that it will come in the second half of this year and the company plans to raise ‘at least $15 bn’. This would make it the world’s largest IPO since Facebook’s $16 bn listing in May 2012. Bloomberg, also citing unidentified sources, reports that Alibaba plans to raise $12.9 bn.

The group devotes more than half of its press release to the Hong Kong market, saying that it wishes ‘to thank those in Hong Kong who have supported Alibaba Group. We respect the viewpoints and policies of Hong Kong and will continue to pay close attention to ‒ and support the process of innovation and development of ‒ Hong Kong.’

The company left open the possibility of a future Chinese listing. ‘Should circumstances permit in the future, we will be constructive toward extending our public status in the China capital market in order to share our growth with the people of China,’ it says.

The announcement comes two days after Sina Weibo, the Chinese messaging service, announced plans to raise $500 mn in an IPO in the US. At the same time, the company announced its traffic may be hurt by a Chinese regulation that came into effect last year penalizing internet users with up to three years in jail for knowingly making or sharing false statements.

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