Alibaba chooses NYSE for IPO

By He Wei in Shanghai and Zhang Yuwei in New York (China Daily) Updated: 2014-06-28 06:50

E-commerce giant Alibaba said it will list its shares on the NYSE under the ticker name "BABA".The company filed for a nominal $1 billion initial public offering in early May, but the exact size of the float is expected to be much higher. Ju Huanzong / Xinhua

China's e-commerce giant Alibaba Group Holding Ltd has decided to list its shares on the New York Stock Exchange in what could potentially be the biggest initial public offering in US history.

In an update to its IPO filing on Thursday, the e-commerce giant said it would list its shares on the NYSE under the ticker name "BABA". Alibaba had filed for a nominal $1 billion initial public offering in early May, though the exact size of the float is expected to be much higher.

Recent estimates have valued Alibaba at about $200 billion. That suggests the planned IPO could raise up to $15 billion, making it one of the biggest Internet IPOs since Facebook' Inc's listing in 2012.

Alibaba takes giant strides

Alibaba picks up digital content stake

"We are pleased to welcome Alibaba Group to the NYSE where they will join our network of global companies and brands," the bourse said in a statement.

Traditionally, most of the tech companies, including Amazon Inc, have listed their shares on Nasdaq. However, in recent years some tech-related IPOs like those of Twitter Inc, LinkedIn Corp and Yelp Inc were conducted on the NYSE.

"China has become the third-largest country by the number of companies listed on NYSE Euronext, after the United States and Canada," said David Ethridge, senior vice-president and head of capital markets at NYSE Euronext Inc, the multinational financial services corporation which operates multiple securities exchanges, including the NYSE.

Alibaba's decision to list its shares on the NYSE could have been prompted by its desire to create an image of a well-established company, rather than that of a start up, said Josef Schuster, founder of Chicago-based IPOX Schuster LLC, a data-driven financial technology firm specializing in financial product-design related to global IPOs. "The Facebook share debacle on the Nasdaq could have been another reason why Alibaba chose NYSE."

The Chinese company's decision came days after a US government group warned potential investors of "major risks" if they buy shares in companies like Alibaba whose company structure is "a complex and highly risky scheme of legal arrangements".

The report, released by the US-China Economic and Security Review Commission, said that the so-called variable-interest entity, a governance structure used by Chinese companies seeking to sell shares on US markets to circumvent Chinese government restrictions on foreign ownership of business in sensitive industries, could lead to losses for US shareholders. It gives foreign investors little control over key assets of the company, which generally remain under the control of the Chinese entity and its owners, the report said.

Alibaba turned to tap the US markets for capital after its dual-class stock structure did not find favor with the capital market regulators in Hong Kong.

Earlier this month, Alibaba disclosed new information about its partnership and board of directors. The firm disclosed the names of 27 partners who are responsible for most of the director appointments to the company's board. Alibaba also disclosed its board of directors, comprising several outside directors.