Showing posts with label Alibaba. Show all posts
Showing posts with label Alibaba. Show all posts

Sep 29, 2013

Alibaba's Hong Kong woes a lesson for Twitter IPO

Events playing out in Hong Kong suggest that any initial public offering of Twitter shares in the U.S. will come sooner, rather than later.
As noted in this column in July, the biggest Internet IPO on the horizon will come not from the San Francisco-based social media startup but from Alibaba Group Holding Ltd., a fast-growing e-commerce company with headquarters on mainland China.
Earlier this year, Alibaba signaled it would offer its shares on the Hong Kong Stock Exchange, which last month celebrated 20 years of accepting such listings from mainland companies.
alibaba
An Alibaba employee walks through a communal space at company headquarters in Hangzhou in 2012.(Photo: Peter Parks, AFP/Getty Images)
But Alibaba's plans for a listing in the former British colony have hit a major snag, as exchange officials there rejected its proposed ownership structure, saying it violates rules that protect the rights of ordinary shareholders.
The company's failure to get the rules exemption it asked for in Hong Kong makes it more likely Alibaba will list its IPO shares in New York instead.
Such a move would very likely push a U.S. listing by Alibaba into the first or second quarter of next year, as it would take time for the company to clear regulatory hurdles and adjust its accounting to conform to U.S. rules.
It would also put the offering in competition with Twitter's — if the U.S.-based firm hasn't executed its IPO by then.
Alibaba is at least several times the size of Twitter, as measured by revenue.
According to figures made public in July by Yahoo, which owns approximately 24% of Alibaba, revenue for the China-based firm soared 71% to $1.38 billion for the quarter ended in March.
That size and rate of growth suggests the company will post 2013 revenue of more than $5 billion, though we won't know for sure until Alibaba discloses its financial statements.
Twitter also hasn't yet disclosed details of its business, choosing instead to file its initial registration statement with U.S. securities regulators on a confidential basis.
Yet such a filing — made possible by changes to U.S. securities laws under the 2012 JOBS Act — is available only to companies with annual revenue of less than $1 billion in their most-recently completed fiscal year.
Research firm eMarketer estimates Twitter's advertising revenue will double this year to $583 million, then rise 63% in 2014 to $950 million.

That makes it significantly smaller than its largest rivals in the market for Internet advertising — namely, Google and Facebook, which eMarketer estimates will capture 33% and 5%, respectively, of the $118 billion market this year.
Twitter's smaller size points up the risk the company has taken by signaling its IPO intentions in a tweet on its own site, without divulging any details of its financials — or of its potential offering.
While the tweet regarding its confidential IPO filing has helped generate interest — and allows Twitter to highlight pre-IPO shares to prospective employees — a delay in executing the offering might be seen by investors as a sign of potential problems.
If Twitter plans to raise money to help it compete with larger, well-funded rivals, doing it sooner would be better.
That's because the time between Thanksgiving and tax day on April 15 has been a graveyard for previous tech IPOs. Zynga's lackluster offering in December 2011 is a prime example.
If Alibaba decides to list its IPO on the New York Stock Exchange, as Twitter is reportedly considering, any significant delay by Twitter could put its share sale in direct competition with an even larger one in the minds of Internet-sector investors.
For all of these reasons, look for the Twitter IPO to be priced in the near future.
John Shinal has covered tech and financial markets for 15 years at Bloomberg, BusinessWeek, the San Francisco Chronicle, Dow Jones MarketWatch, Wall Street Journal Digital Network and others.

Courtesy: USAtoday

Sep 27, 2013

Top shareholders back Alibaba's controversial corporate structure

Alibaba Group's biggest shareholders have backed a partnership structure that is at the center of a debate over where the Chinese e-commerce giant may list its shares in the most highly anticipated Internet IPO since Facebook Inc's $16 billion offer last year.

Alibaba, which analysts value at as much as $120 billion, appears to have failed to convince Hong Kong regulators to waive tough listing rules, potentially handing the lucrative IPO to rival U.S. market operators.
Founded by billionaire entrepreneur Jack Ma, Alibaba wants to find a home for its stock where its 28 partners, mainly founders and senior executives, can keep control over a majority of the board, even though they own only around 13 percent of the company.
 In the first public comments from one of those partners, Executive Vice Chairman Joseph Tsai defended Alibaba's corporate structure on Thursday, saying it is a "living body" intended to preserve the company's culture.
While losing such a large IPO would be a blow to the Hong Kong stock exchange - Alibaba could seek to raise as much as $15 billion in the initial public offering - regulators there have stood firm in their defense of small investors and a policy of treating all shareholders alike.
"We understand Hong Kong may not want to change its tradition for one company, but we firmly believe that Hong Kong must consider what is needed in order to adapt to future trends and changes," Tsai, one of Alibaba's 18 founders in 1999, wrote in a blog post. (r.reuters.com/jyq43v)
On Friday, Alibaba received the backing of both Japanese wireless carrier SoftBank Corp and Yahoo Inc, its two largest shareholders with stakes of 36.7 percent and 24 percent, respectively.
"Alibaba has built a phenomenal business and created tremendous value for its shareholders over the years," SoftBank CEO Masayoshi Son said in a statement. "We are therefore very supportive of the Alibaba partnership structure."
In a brief statement, Jacqueline Reses, Chief Development Officer at Yahoo and an Alibaba board member, said: "In a fast-moving technology market, it's critical that a company's leadership can continue to preserve its culture and set its strategic course for the future."
"As one of Alibaba's largest shareholders, Yahoo believes that management's efforts reflect the desire to govern the company for long-term success while also balancing the rights of shareholders."
STRONG DEFENCE
Tsai's defense of Alibaba's partnership model comes as debate rages in Hong Kong about whether the Asian financial hub should be more flexible to attract new and emerging companies.
Hong Kong Exchanges and Clearing Ltd (HKEx), which is both the regulator of new listings and a publicly traded company that benefits from IPO fees and subsequent stock trading volumes, has insisted that its first duty is to protect all shareholders.
In a lengthy blog post this week, the exchange's CEO Charles Li suggested maybe leaving open the door to potential rule changes, so long as discussions aren't rushed. He did not directly name Alibaba in his commentary.
Hong Kong's failure to secure the Alibaba IPO would mean lost revenues and less marketing clout to attract other deals. Alibaba commands 80 percent of China's e-commerce market and handled 1 trillion yuan ($163.4 billion) of goods last year through its Tmall and Taobao market platforms.
"The question Hong Kong must address is whether it is ready to look forward as the rest of the world passes it by," Tsai wrote. "As a company with most of our business in China, it was natural for Hong Kong to be our first choice."
"Those who lack appreciation of our partnership philosophy may view our proposal merely as a founder wanting to preserve control. We could not have a more different objective," he added.
Alibaba declined to comment beyond Tsai's post. A spokesman for the Hong Kong exchange declined to comment.
($1 = 6.1214 Chinese yuan)
(Reporting by Paul Carsten in BEIJING, Edwin Chan in SAN FRANCISCO, Mari Saito and Nobuhiro Kubo in TOKYO, Elzio Barreto and Denny Thomas in HONG KONG; Editing by Ian Geoghegan)


Courtesy: Reuters


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