Chinese online giant Alibaba set for record 15billion stock market flotation

date: 9/18/2014

The biggest firm you’ve never heard of is poised for a record £15.3billion stock market listing.

Online giant Alibaba accounts for a staggering 80% of all internet retail sales in China, and handles more transactions than eBay and Amazon - combined.

The firm, founded by Jack Ma in 1998, is expected to set the price of its shares later on Thursday, ahead of a listing in New York on Friday.

The move could value the business at £122bn, making it the world’s third most valuable tech company after Google and Facebook.

Alibaba works in a similar way to eBay, in that it acts as a middleman between buyers and sellers.

The firm generated £5.2bn in revenue last year on more than £180bn worth of goods sold through its sites, and is on track to smash that figure this year.

The listing is set to confirm Ma as China’s richest man.

The 49-year-old, whose flamboyant style has seen him dress up as Lady Gaga in the past to entertain staff, started Alibaba in his one bedroom flat. He retains a 9% stake.

Since then it has come to dominate the online market in China, the world’s second biggest economy, having branched out into e-payments and financial investments.

There has been frenzied interest from investors, keen to get a bite of a China’s rapidly growing consumer-fuelled internet market.

The strong demand prompted Alibaba to boost the initial share price to between $66 and $68.

Ma disappointed would-be UK investors by shunning a meeting in London earlier this week.

Peter Garnry, head of equity strategy at Saxo Bank, explained how Alibaba was rapidly expanding into new areas.

He said: “It looks like they are transitioning to being a mobile company and it seems that will be a pathway to growth in the future.

“Online shopping in China is still a very small proportion of total consumption so the growth potential is enormous.

“It is the backbone of the transition in China to being a consumer economy and I don’t think investors should underestimate the potential.

Alibaba is likely to use money from the flotation to expand its business in the US and Europe, where it is not widely known.

A big winner from the sale will be internet search firm Yahoo, which owns nearly 22% of Alibaba, and stands to make a hefty profit. Its stake could be worth almost £20bn.

Alibaba’s workers are also set to be quids in from the stock market flotation after being handed a potential £2.8bn windfall.