Alibaba raises nearly $22 billion in IPO
Alibaba doesn't do things small.
The China-based e-commerce giant late Thursday priced its shares at $68 apiece, making the deal one of the world's biggest ever initial public offerings. Alibaba raised $21.8 billion in the IPO, with the company due to start trading Friday on the New York Stock Exchange.
The pricing values the company at $167.6 billion, making it more valuable than U.S. stalwarts such as Amazon.com (AMZN), which has a market value of $150 billion, and Citigroup (C), with a market cap of about $163 billion.
By comparison, Facebook's (FB) IPO in 2012 was priced at $38 a share, valuing it at $104 billion, the biggest-ever valuation for an American company at that time. Responding to strong interest from investors, Alibaba this week cranked up its IPO pricing between $66 to $68 per share after setting an initial range of between $60 to $66 apiece.
The stock will list on the NYSE with the ticker BABA, with the IPO coming as American investors are interested in tapping into the fast-growing Chinese market. About 80 percent of all online shopping in China is conducted through Alibaba, and its American listing is viewed as a way to invest in China's burgeoning middle class. For many Chinese consumers, buying online is preferable to shopping in some of the country's crowded and polluted cities, according to Fortune.
Of course, the real test will come when the shares start trading. Given that IPOs favor Wall Street insiders, with a company like Alibaba going through a "road show" and pitching shares to big institutional investors, its shares won't be available to most individuals until they start trading on the exchange.
But while Alibaba is a giant in China, it remains little known in the U.S. That may go some ways to explaining why many smaller investors aren't ringing up their brokers, trying to get a piece of the action, according to The Wall Street Journal.
There are also governance issues. Company insiders have control of the company, yet own only a small percentage of capital, while the IPO isn't actually for Alibaba Group itself, but for a separate entity with a profit interest in that business.
Founder Jack Ma, 50, created the e-commerce business after visiting the U.S. in 1995, when he used the Internet for the first time. His wild ideas and a 2009 appearance in a wig and lipstick led to the nickname "Crazy Jack Ma," but some might now consider him crazy like a fox.
After all, his net worth of almost $22 billion is set to rise by $867 million, with his sale of 12.75 million shares in the IPO.