ABSTRACT

ALIBABA.COM
- IPO

This assignment
contains Alibaba IPO
details, one of the most
successful Chinese ecommerce
conglomerate about its
first issue of shares
(initial public offering)
in New York Stock
Exchange Market in
September 2014

Alibabas Initial Public Offering in New York Stock Exchange (NYSE:BABA)

in September 2014
Alibaba Group Holding Limited is a Chinese e-commerce company that provides consumer-toconsumer, business-to-consumer and business-to-business sales services via web portals. It also
provides electronic payment services, a shopping search engine and data-centric cloud
computing services. The group began in 1999 when Jack Ma founded the website Alibaba.com, a
business-to-business portal to connect Chinese manufacturers with overseas buyers. In 2012, two
of Alibaba's portals handled 1.1 trillion yuan ($170 billion) in sales. Suppliers from other
countries are supported (with more stringent checks than for Chinese companies), but the
company primarily operates in the People's Republic of China (PRC).
At closing time on the date of its initial public offering (IPO), 19 September 2014, Alibaba's
market value was US$231 billion. However, the stock has traded down and market cap was
about $212 billion at the end of December 2015.
In September 2013, the company sought an IPO in the United States after a deal could not be
reached with Hong Kong regulators Planning occurred over 12 months before the company's
market debut in September 2014, with Reuters Instrument Code "BABA.N". The pricing of the
IPO initially raised US$21.8 billion, which later increased to US$25 billion, making it the largest
IPO in history. Buyers were actually purchasing shares in a Cayman Islands shell corporation,
not in the Alibaba group, as China forbids foreign ownership of its companies.
IPO details
After claiming the record for the largest US-listed initial public offering, Alibaba Group can now
say its record-breaking IPO was the biggest in the world.
On 18 September 2014, Alibaba's IPO priced at US$68. At that price, the company raised $21.8
billion at a valuation of about $168 billion. Alibaba was the biggest US IPO in history
On Friday, 19 September 2014, Alibaba's shares (BABA) began trading on the NYSE at an
opening price of $92.70 at 11:55 am EST.
Priced at $68 late Thursday, Alibaba opened at $92.70 shortly before noon, climbing to $99.70
before closing at $93.89.
More than 100 million shares traded within 20 minutes and over 271.6 million shares exchanged
hands by the day's end. Early NYSE indicators had shares opening at $80 to $83. But demand
was so strong, the offering price was hiked 10 times.
Scott Cutler, NYSE's global listings chief, said trading was delayed by massive order
imbalances.

"We've got hundreds of thousands of orders,'' Cutler told CNBC an hour into the delay."We're
chasing to find sellers. Even at these levels, there doesn't appear to be a lot of sellers."
Most shares were allocated to large institutional shareholders, not individual shareholders.
Shortly after opening for trade, Alibaba shares surged to $99 per share, or up more than 45%
from its IPO price.
On Monday, 22nd September 2014, the company announced that underwriters had exercised an
option to purchase additional shares at the $68 IPO price, boosting the total amount raised by
Chinese e-commerce giant and its selling shareholders from $21.8 billion to $25 billion. Bankers
bought an additional 48 million American depositary shares, taking the total amount of shares
sold in the offering to 368 million, or about 14.9% of the company.
In raising $25 billion, Alibabas IPO surpassed the 2010 offering from the Agricultural Bank of
China, which raised $22.1 billion in it debut on the Hong Kong Stock Exchange. Alibaba was
able to sell more shares due to its over-allotment, or greenshoe, option, which allows
underwriters to placate investor demand for the stock by obtaining more shares from the
company at the IPO price.
GREENSHOE or OVERALLOTMENT
Existing shareholders Alibaba Chairman Jack Ma, Vice Chairman Joseph Tsai and Yahoo YHOO
-0.86% provided the extra shares sold in the over-allotment. Ma sold an additional 2.7 million
shares, selling a total of about 15.5 million shares in the IPO, while Tsai sold 5.2 million shares,
after offloading an additional 900,000 shares in the greenshoe.
By selling in the over-allotment, Yahoo became the largest seller in Alibabas IPO, surpassing the
123 million shares offered directly from the Hangzhou-based company. Yahoo sold an additional
18.26 million shares, offloading a total of 140.3 million shares in the IPO for more than $9.5
billion in pre-tax cash.
Alibaba began trading on Friday on the New York Stock Exchange, with shares opening up at
more than 35% above the $68 IPO price. On Monday, shares have fallen below the $90 mark,
down more than 4% in intraday trading.
UNDERWRITERS
Citigroup Inc, Credit Suisse Group AG, Deutsche Bank, Goldman Sachs Group Inc,
JPMorgan Chase & Co and Morgan Stanley acted as joint bookrunners of the IPO. They
emerged as winners for the honor of running an I.P.O. that could ultimately end up raising
more than $20 billion.
They earned $300 million in fees, taking home 1.2 percent of the proceeds.

 Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan

Chase & Co. and Morgan Stanley each earned 15.7 percent of the fees, while Citigroup
Inc.s share represented 7.9 percent, the filing shows. Alibabas 28 other underwriters
received 1 percent or less apiece.