According to the territory’s South China Morning Post, China’s largest e-commerce company, Alibaba Group,
is discussing Nasdaq (paywall) as the venue for its long-awaited listing. An IPO could value Alibaba at more than $60 billion, making it potentially the biggest tech IPO in history. If the company chooses a US listing, that would be a further blow to the Chinese territory, where the value of IPOs on the stock exchange plummeted to a four year low last year as mainland China’s economic slowdown made investors less interested in allocating cash there.
The destination of Alibaba Group's much-anticipated initial public offering will likely be determined by this catchphrase: "Show me the money".
Market analysts yesterday said the IPO for the mainland's largest e-commerce company would be conducted where it could get the highest value for its shares in what could be the biggest technology-related offering this year.
Hangzhou-based Alibaba is apparently keen to explore its best options as its senior finance executives held closed-door discussions in Hong Kong on Wednesday with a representative of Nasdaq OMX, the operator of the Nasdaq Stock Market in New York.
"It would be a matter of pride for a Chinese company like Alibaba to have its public offering on Chinese soil, but it must consider where it can get the highest price-earnings ratio," VC Brokerage director Louis Tse Ming-kwong said:
In a research note published last month, Morgan Stanley analyst Jordan Monahan calculated that Alibaba was worth between US$66 billion and US$128 billion, based on its forecast net income of US$2.28 billion this year and US$3.55 billion next year. He suggested a share offer this year would value the company at US$80 billion.
Tse said: "Alibaba must ask itself: which market can afford such a big IPO that could be many times oversubscribed?" He pointed out that Nasdaq's attraction for Alibaba was that it was the preferred market for many information-technology, media and telecommunications companies.
Li Zhongzhi, an analyst at Ping An Securities in Shenzhen, said Alibaba's shareholders - including Japan's Softbank, internet pioneer Yahoo and private-equity investors such as China Investment Corporation - "will prefer the flexibility of the Nasdaq or Hong Kong, where they can cash out their shares easily".
"But it will be difficult to make US investors recognise the full value of Alibaba," Li said. Alibaba is currently being restructured into 25 business units.
Alibaba, which entrepreneur Jack Ma Yun started ou