The Avanti Group is advising clients on Alibaba Holding Ltd as discussions continue regarding the company's IPO listing currently in dispute over retaining control of China's largest e commerce company that could see the highly anticipated IPO of Alibaba Holding Ltd move its listing to the United States.
The Avanti Group the equities research house based in Tokyo, providing professional trading and investment research solutions to institutional and private investors across the globe have recently drawn their investor's attention to what may see China's largest e-commerce company listing for initial public offering outside of Hong Kong due to listing restrictions.
As the markets have watched on patiently, talks designed to list the largest of China's e commerce companies, Alibaba on the Hong Kong Stock exchange may have fallen through over dispute over control to list different classes of shares. The company, which has seen in recent months valuations of between $105 and S120 billion dollars, was earmarked to be the former British colony's largest IPO since 2010.
Alibaba's valuation makes it the third largest internet based company in the world after Google and Amazon, estimated to have been capable of raising as much as $12 billion in its floatation in Hong Kong. This would have been an exceedingly modest level given the company's expected operating profit of $7.1 billion in 2014. The company already accounts for 70% of all package deliveries in China valued at $163 billion last year.
"It really has come down to one crucial sticking point, Hong Kong doesn't allow dual voting class shares on listing and without this the company's founder Jack Ma and his partners would be unable to control board nominations with their small number of shares, subsequently losing control of what they've built. The U.S however does allow such listings to take place and this is what would seem to be the reason for the change in venue," said Andrew Taylor Senior Vice President of Mergers and Acquisitions at The Avanti Group.
Alibaba's rise to the third largest internet company in the world has been fueled by the unprecedented growth of China's internet usage base, some 591 million and increasing. This has seen what started as a one man's business operating out of an apartment in 1999 expanding to employ over 24,000 workers and give its founder an estimated net worth of $3.7 billion, making him one of the richest men in China.
"While this breakdown in talks and any subsequent changes to the IPO listing may be in accordance with the best outcomes for the founder and his partners, it may end up being far more beneficial to the company as a whole to have a U.S listing. E-commerce and internet based IPO's have been doing very well in the U.S over the last few years and a lot of Western investors may simply see this as more accessible than one based in Hong Kong, whilst the Asian investor will follow the desirable share holding, we shall continue to advice our clients and investors as the situation develops," concluded Andrew Taylor Senior Vice President of Mergers and Acquisitions at The Avanti Group.
The Avanti Group is an equity research house providing research and analysis outsourcing solutions for institutional financial traders worldwide, founded in early 2003.