Alibaba to Pay Underwriters 1% of U.S. IPO as Base Fee
Prudence Ho and Telis Demos
March 28, 2014
(c) 2014 Dow Jones & Company, Inc.
For bankers handling Alibaba Group Holding Ltd .'s initial public offering, the fees they collect will have shades of the Facebook Inc. offering a couple of years ago.
Alibaba is planning to pay its underwriters a base fee of 1% of the more than $15 billion it is expected to raise from its U.S. IPO this summer, people familiar with the matter said, one of the lowest-ever payments made to bankers on a U.S. Internet IPO....
What I don't understand is, in this day and age of internet e-commerce, why can't a huge online auction site like TaoBao sell it's own shares and cut the WS leaches out of the game?! Google did it, although in a half#$%$ way because it still used underwriters.
Very simple. They need large account contacts to be able to sell $15 Bil worth of shares to raise that kind of money. Not enough retailers to be able to do that. You need Hedge funds and Mutual funds investing in this.