Nanjing International Trading Co., Ltd. Alibaba Group, the Chinese e-commerce giant that is part-eBay, part-Amazon, has finally filed for an IPO in the United States.
It is a watershed moment for the global Internet and is one of the largest public offerings in tech. It is also the best opportunity so far to buy into the massive digital growth that has been taking place in China.
In its initial filing, Alibaba said it was raising $1 billion, but that is only a placeholder and will surely change. Demand from investors is likely to be high and analysts have estimated that Alibaba would raise $15 billion or more at a valuation of close to $200 billion.
Alibaba did not say whether it had selected the Nasdaq or the New York Stock Exchange for its IPO. (Pro tip: It’ll be one of them!)
Of course, every investment banker known to man and Wall Street is on the offering documents, including Credit Suisse, Morgan Stanley, Goldman Sachs, J.P. Morgan and Deutsche Bank.
Using a series of pretty graphics in the filing, Alibaba called itself the “largest online and mobile commerce company in the world.” Take that, Amazon!
Actually, mobile is the key to Alibaba’s future and most interesting part of the filing, with the company noting that it is 20 percent of sales. Alibaba cited reports that said it has 76 percent of the mobile commerce market in China.
Other deets: According to the document, in its most recent full financial year, ending in March, revenue was $5.5 billion, with earnings of $1.35 billion. Because its costs are low — it is a marketplace and not a holder of merchandise — its margins were about 45 percent, a stellar result. Lastly, Alibaba has close to $8 billion in cash and cash equivalents.
Yahoo has a 22.6 percent stake and will have to sell about half of that into the public offering. Japan’s SoftBank, a longtime shareholder of Alibaba, holds 34.4 percent. Its founder Jack Ma has a nine percent stake and his key exec (and a very lovely guy), Joe Tsai, owns 3.6 percent.
Among the brands that Alibaba has — which are still not known outside of China well — are Taobao and TMall. But it also has stakes in communications, finance and has made a series of investments in a range of other businesses. That includes Lyft, 1stdibs and ShopRunner here in the U.S.
More to the point, Alibaba is one of the top three Internet companies in China — the others are communications-focused Tencent and Baidu, the Chinese search giant. All are just beginning to become intense rivals and crossing over into each other’s businesses.
While tech stocks in general have taken a beating of late — Hello, Twitter! — many think Alibaba will buck that trend, due to its enormous size in one of the world’s fastest-growing markets. Few U.S. Internet companies have been successful there — including Yahoo, except for its prescience in buying a 40 percent stake in 2005 for $1 billion.
Alibaba — founded in 1999 in Hangzhou — is expected to stick with the Chinese market, noting the opportunity there in the filing for future growth, since only half of the population is online.
More to come in the months ahead as Alibaba moves to its IPO, as it seeks approval from U.S. regulators and begins the process of selling itself to investors.