Chinese e-commerce giant Alibaba to raise $1 bn in US markets
08 May 2014
Hangzhou-based Chinese e-commerce giant Alibaba has filed initial public offer (IPO) document with the US Securities and Exchange Commission (SEC) for raising $1 billion through a stake sale.
Market analysts say the actual amount that Alibaba intends to raise could be much bigger than the proposed $1 billion.
"Becoming a listed company has never been our goal. It is a tactic and means to realize our mission," Ma Yun (better known as Jack Ma) founder and chairman of Alibaba, said in an internal communication to employees.
Ma said the US listing will give greater exposure to Alibaba, helping it to better meet challenges in the global financial market.
"Not all companies have the opportunities to face such global challenges. We are honored to be one of them," he added.
Based on cash flow projections and synthetic pricing, Alibaba is estimated to be worth $80-100 billion at the low-end of forecasting. The majority of estimates are in the $150 billion range while a few analysts have come out with estimates of $250 billion and above.
Based on statements from Yahoo, owns 24 per cent of Alibaba, the Chinese e-commerce firm had a net income of $3.52 billion on revenues of $7.95 billion in 2013. The net margin was a whopping 45 per cent.
Published reports by McKinsey & Co states the Chinese e-commerce market will grow to be between $420 billion and $650 billion by 2020.
Alibaba dominates B2B, B2C and C2C in China and they also have 50 per cent of the e-payment market with Alipay.
According to a 2013 report on the company, The Economist said
"In 2012, two of Alibaba's portals together handled 1.1 trillion yuan ($170 billion) in sales, more than competitors eBay and Amazon.com combined."
Currently there is a frenzy of deal activity in China's internet space with Alibaba, Baidu and Tencent vying to buy out smaller companies, all signs that the Chinese market is consolidating and that competitive barriers are changing.
This transformation is what is letting the e-commerce companies enter new online sectors such as portals, media, location-based services and social media as also of offline sectors such as finance, retail and transportation.
