Investors rush for Alibaba’s $163bn float

Alibaba has also kept tight control over the float, deciding not to appoint a leader banker and leaving some bankers complaining of extra work

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The Independent Online

China’s e-commerce giant Alibaba made history yesterday after gaining enough orders for shares to cover its entire $163bn (£101bn) float just two days into its investor roadshow.

Its billionaire founder and executive chairman, Jack Ma, held meetings in New York and Boston last week for the float, which is expected to price the vast company’s shares at between $60 and $66.

At the top end of that price range, Alibaba – which powers 80 per cent of all online commerce in China and handles more transactions than Amazon and eBay combined – would raise $21.1bn.

That easily outstrips the $16bn raised by Facebook in 2012 as the biggest-ever technology float.

It could even set a new record as the biggest float of all time if underwriters exercise an option to sell extra shares to meet demand – putting it as high as $24.3bn, and overtaking Agricultural Bank of China’s $22.1bn listing in 2010. The company will price the deal on 18 September.

The spread-betting firm IG Group’s “grey market” on Alibaba is signalling a market value of more than $200bn and a 20 per cent “pop” in the share price from the top end of the current range.

The first stop in the roadshow in New York was standing-room only as 800 investors showed up, forcing some into overflow rooms. Investors are keen to pile into Alibaba despite its unconventional governance plans: 27 “partners”, including Mr Ma, will nominate a majority of the company’s board.

Alibaba has also kept tight control over the float, deciding not to appoint a leader banker and leaving some bankers complaining of extra work.

The company has negotiated underwriting fees of about 1 per cent, which still means a $200m-plus payday for the big six banks involved – Credit Suisse, Citigroup, Goldman Sachs, Deutsche Bank, Morgan Stanley and JPMorgan.

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