Alibaba priced at $68 ahead of monster IPO

Shares in Chinese e-commerce giant set to begin trading on Friday in new York

(AFP PHOTO/MIKE CLARKE)

Chinese e-commerce giant Alibaba finally priced its monster initial public offering (IPO) at the top of the range in New York late on Thursday, and is expected to start trading on Friday morning.

Alibaba priced its IPO at $68 a share, which means it could raise up to an initial $21.8 billion and that the whole company could be valued at up to $168 billion.

Such a stock market value would make Alibaba – which is responsible for about 80 percent of China’s online sales -- bigger than Boeing, Amazon, eBay and Walt Disney.

The company’s initial IPO target range had been between $60 and $66 a share, but strong demand led to a higher price.

“It was one of the more impressive IPO presentations,” Jerry Jordan, manager of the $48 million Jordan Opportunity Fund, told Reuters. “I didn’t realize just quite how successful they are."

Alibaba's IPO is at present the third-largest in history after Agricultural Bank of China’s $22.1 billion flotation in 2010 and the $22 billion offering in 2006 of Industrial and Commercial Bank of China (ICBC).

However, if underwriters take up an option to sell more shares, the Alibaba IPO could raise up to $25 billion and become the largest stock listing ever.

Alibaba's revenue rose 46 percent in quarter through the end of June, with net income attributable to its shareholders almost tripling to $1.99 billion, according to Reuters data.

Alibaba’s IPO has caught investors’ interest despite concerns over its unorthodox corporate governance. Alibaba founder Jack Ma had to address concerns over its governance in IPO-related filings with US regulators.

“Rarely in history has there been an IPO of this size for a company that we know less about,” said Senator Bob Casey, a Democrat from Pennsylvania.

“I continue to be concerned that about the level of transparency from Chinese firms listing in our markets."

Alibaba is selling about 320 million shares in the IPO – roughly 13 percent of the company.

For Alibaba shareholders who got in on the action early – Yahoo and Japan’s Softbank – a successful IPO would reward their move.

Yahoo is expected to sell about $8 billion worth of shares in the IPO, leaving it with a roughly 16.3 percent stake in Alibaba.

Softbank is not expected to sell any of its 32 per cent stake in Alibaba in the meantime.