April 22, 2014

Alibaba: The Biggest E-Commerce IPO in History

Posted by Janna Leyde Category IconInternational Category IconNews & Trends

Single’s Day — aka November 11th — was last year’s most successful day in the history of online sales. Not Black Friday. Not Cyber Monday. Single’s Day.  This Chinese holiday exclusively celebrates bachelor/bachelorettehood, and last year’s iteration featured many, many people shopping on Alibaba.com to buy many many gifts. So many gifts, that Single’s Day 2013 generated $5.75 billion for the online retailer alone. For those of you who have not heard of this Asian e-commerce institution, Alibaba has nothing to do with forty thieves or Arabian nights. Alibaba is China’s behemoth of an e-commerce company, which currently accounts for four-fifths of all of China’s online spending. And for those of you who are in the business of buying and selling online, you should know that Alibaba is about to go public in a matter of days.

Although the company is single-handedly China’s biggest online retailer, the company chose the New York Stock Exchange over Hong Kong (or London), because it plans to expand the global market. The official statement from Alibaba, thanks to Venture Beat, can be found below, and also hints at a future listing at home in Hong Kong.

“Alibaba Group has decided to commence the process of an initial public offering in the United States.  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.  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.”

“We wish 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.”

Courtesy www.ifrasia.com/
Courtesy www.ifrasia.com/

To understand Alibaba’s success, imagine a company that sells like Amazon, transacts like PayPal, and innovates like Google. Total gross merchandise bought and sold on alibaba.com in 2013 amounted to $240 billion — a large part thanks to Single’s Day. That’s double Amazon’s $100 billion and triple what eBay sells. These are the kind of numbers that attract the big banks. Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, and Morgan Stanley are all vying for the lead role on this IPO.

Outside of this NYE IPO being a very big step for Alibaba, the initial offering has the potential to be the biggest tech IPO offering to date. “We expect it to be the largest tech IPO ever, the largest IPO of the year, the largest Chinese IPO of the year,” Max Wolff, chief economist and strategist at Citizen VC, told Phys.org. “It’s a big number, probably a record-breaker by any metric.” Reuters reported Alibaba Holding Group LTC to open at more than $16 million (9 millions pounds). That will de-throne Facebook, which went public in 2012 at $16 million, for having the biggest tech IPO to date.

E-commerce extra: Taluswood Films is releasing “Crocodile in the Yangtze: The Alibaba Story” a documentary film that trails the company’s success, on May 28th.