Magazine article Global Finance

DR Market Awaits Arrival of Alibaba

Magazine article Global Finance

DR Market Awaits Arrival of Alibaba

Article excerpt

Alibaba Group, the largest e-commerce provider in the world, expects to benefit from the rising spending power of China's consumers. The company's strategic plan is outlined in its prospectus for an American depositary receipt offering of a 12% stake in the company that could total a record $20 billion.

China already has the world's largest Internet population, with 618 million users. The country's online shopping population, however, is relatively underpenetrated, according to Alibaba. That means there is lots of room for growth, especially since consumers are expanding the range of products and services they buy online, the company noted. "We believe that the increased usage of mobile devices will make access to the Internet even more convenient," Alibaba said.

Last year the average buyer on Alibaba's online marketplaces placed 49 orders, up from an average of 39 orders in 2012, and 33 orders in 2011. According to ¿Research, which focuses on the Chinese Internet market, online shopping in China is expected to grow at a compound annual rate of 27.2% from 2013 to 2016.

NYSE OR NASDAQ

In its initial public offering document, filed with the US Securities and Exchange Commission on May 6, Alibaba revealed its lead underwriters: Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley and Citi. However, it did not disclose its depositary bank and said it was still trying to decide between listing on the New York Stock Exchange (NYSE) or the Nasdaq Global Market. Alibaba turned down the Hong Kong Stock Exchange, which raised issues about its governance structure.

Alibaba could eventually have a market value of between $150 billion and $200 billion, which would make it bigger than Amazon but not as large as Google or Apple. Yahoo, which owns 22.6% of Alibaba, is expected to sell a 9% stake in the IPO, which would give it the largest share of the proceeds. …

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