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".