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Alibaba Group likely to float $15-bn IPO in US: report

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18 March 2014

Chinese e-commerce giant Alibaba Group Holding Ltd had decided to float its long-awaited initial public offer (IPO) in the US, and Thomson Reuters reported citing sources as saying that it was in discussions with six banks for underwriting the deal. The IPO would be the most high-profile IPO since Facebook Inc's listing nearly two years ago, the report said.

The company said in a statement on Sunday that it had decided on starting the US IPO process, putting an end to speculation about where it would go public.

Separately, sources told Reuters that Alibaba was in discussions with Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs Group, J P Morgan, and Morgan Stanley for lead underwriting roles.

Most of the six banks that would win the coveted role of joint global coordinator, the report quoted some unauthorised sources as saying.

According to projections by analysts, the Hangzhou, China-based company was worth at least $140 billion, and the IPO proceeds could exceed $15 billion, Reuters had reported earlier.

The big ticket deal for the banks is expected to yield an estimated $260 million in underwriting fees, assuming 1.75 per cent commission, and boost their rankings in the league table.

Meanwhile, founder Jack Ma and his team are taking rapid steps to consolidate Alibaba's position as a conglomerate, across the widening reaches of China's booming entrepreneurial economy. Ma told Bloomberg Businessweek in an interview in 2012 that the company would be totally different in the next five years.

He added, the team at Alibaba wanted to build up a company in Chinese history that nobody had seen before.

The first three months of the year saw Ma make deals at a scorching pace. Many but not all of them too aim at rival Tencent, currently considered Asia's largest Internet company. Earlier this month, Alibaba announced its intention to spend HK$6.24 billion ($804 million) to take a controlling stake in ChinaVision Media, a Hong Kong-listed company that, among other things, owned the Chinese rights for mobile TV broadcasts of English Premier League soccer. The deal would give Alibaba a massive library of movies, TV shows, and sports broadcasts, even as it kept the programming out of Tencent's hands.

Alibaba had also invested aggressively in gaming and instant messaging, two services that had not been central to Ma's vision for Alibaba until late last year.

 





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