Yahoo to buy 10 per cent of Alibaba.com''s initial share offer
By Our Corporate Bureau | 09 Oct 2007
Mumbai:
US Web giant Yahoo
Inc will buy 10 per cent of an initial share sale by Alibaba.com Ltd, China''s
biggest e-commerce firm, as it steps up a battle with Google Inc and Baidu in
the world''s second-biggest internet market.Yahoo will buy into a Hong Kong IPO by Alibaba.com, expected to raise about $1 billion.
Alibaba,
which helps firms market their products, dominates the business-to-business segment
in China''s small and medium business sector, handling 69 per cent of trade value.
Yahoo
already has a 40 per cent stake in the Chinese firm''s parent, Alibaba Group, which
took over Yahoo''s China operations in 2005 and has been reorganising it since.
Fund managers believe the firm will get even stronger with Yahoo''s backing.
Yahoo China trails its main rivals in the $600 million search engine market, with a 12.5 per cent share, compared with Google''s 21 per cent and Baidu''s 58 per cent, according to research firm Analysys International.
China has nearly 32 million small and medium-sized enterprises (SMEs). Trade among these SMEs reached $532 billion in 2007, and is expected to grow by an annual 15 per cent over the next five years, according to Shanghai-based consultancy iResearch. Around one-third of these firms use some kind of online service.
About 73 per cent of Alibaba.com''s revenue in the first half of 2007 came from its international online market place, which brings together importers and exporters.
As of June 2007, Alibaba.com hosted 2.4 million supplier storefronts, with on average 2.9 million new product listings per month.
Goldman Sachs expects Alibaba.com to post a 629 million yuan ($83.78 million) net profit in 2007, a 186 per cent jump from last year.
Alibaba plans to sell 858.9 million shares, or 17 per cent of its enlarged share capital, in its Hong Kong IPO. Other than the portion reserved for Yahoo, 75 per cent of the share sale is earmarked for global investors and 15 per cent for Hong Kong individual investors.
The
issue is being handled by Goldman Sachs, Morgan Stanley and Deutsche Bank.
