7th May 2014
Mindful Money columnist Edmund Shing looks at the Alibaba.com IPO
The Chinese business-to-business (B2B) and business-to-consumer (B2C) e-commerce platform Alibaba has finally filed for a US flotation (Initial Public Offering) today, due to list in the near future in New York. Current analyst estimates pitch the starting market value of the entire company at between $150bn and $200bn, a massive public company by any standards and likely to represent the largest technology IPO since Facebook came to market back in 2012.
The business, headed by former English schoolteacher Jack Ma (no wonder that he speaks English so well!), dominates business to business e-commerce transactions, typically between suppliers and customers not only in China, but effectively globally.
While a detailed description of all Alibaba’s businesses is beyond the scope of this (short) article, there is more detail to be found here on cnbc.com, for those who are interested in finding out more about the company.
Just a few numbers to illustrate its 400lb gorilla-like presence in this technology transaction space:
This puts Alibaba ahead of Amazon plus Ebay together in terms of numbers of buyers and volume of transactions, according to Reuters! (Bear in mind that Amazon has a total market capitalisation in the US of $135bn, while Ebay is worth over $64bn currently).
At the upper estimate of a starting market value of $200bn, Alibaba would be the 14th-largest company listed in the US, between the bank JPMorgan and the telecoms company Verizon. In the Technology sector, only Apple (market value of $512bn), Google ($350bn) and Microsoft ($323bn) would be larger. Note: at $200bn, it would have a larger value than the technology grand-daddy IBM ($192bn market value)!
Even at the lower estimate of $150bn, Alibaba would sit at number 23 in the list of largest listed US companies with the same market value as Facebook now, over 7 times more than Twitter and 9 times more than Linkedin.
Even if it will prove very difficult, or well nigh impossible to get your hands on Alibaba shares at the US IPO, there are other ways to get exposure in your portfolio. The best ways are via the listed shares of the two biggest Alibaba shareholders:
Otherwise, there are also internet and technology ETFs that will have exposure to Yahoo and/or Softbank, including: