Alibaba picks NYSE for IPO
Updated: 2014-06-27 11:12
By Zhang Yuwei in New York (China Daily USA)
People walk at the headquarters of Alibaba in Hangzhou, Zhejiang province, April 23, 2014. [Photo/Agencies]
The decision by China's e-commerce giant Alibaba Group to go public on the New York Stock Exchange will make the exchange home to one of the largest IPOs in US history.
"All the main non-tech, mature listings in the past have gone public on the NYSE, such as Visa or MasterCard or the big spinoffs such as Philip Morris International or Abbvie," said Josef Schuster, founder of Chicago-based IPOX Schuster LLC, a data-driven financial technology firm specializing in financial product-design related to global IPOs.
Hangzhou-based Alibaba filed a nominal $1 billion IPO in early May and the ultimate offering is expected to be higher as recent estimates of it have ranged from $150 billion to $200 billion.
"We participated in a comprehensive and deliberate exchange selection process and we are pleased to welcome Alibaba Group to the New York Stock Exchange," according to an NYSE spokesman.
Chicago-based Schuster said Alibaba's going public on the NYSE shows the company might want to create an image that it is more established than a startup.
"I think by going public on the NYSE, Alibaba will want to give investors the image that it is not a fresh hot startup company, but a well-seasoned, large firm," said Schuster. "Alibaba obviously may have been driven to the NYSE by the fiasco which the Nasdaq Facebook offering had as well."
Alibaba first unveiled its IPO plans in March to list its shares in the US. The company had also considered Hong Kong.
The two US exchanges have been competing for new listings - including Chinese IPOs - with Nasdaq scoring the most tech IPOs such as Microsoft Corp, Intel Corp, Apple Inc and Yahoo, which owns 22 percent of Alibaba.
The NYSE won tech listings such as LinkedIn Corp, Pandora MediaInc and Yelp Inc.
Earlier this year, executives from both exchanges said that Chinese companies listing in the US will see a pickup with more than 20 expected to go public as investor confidence is restored in Chinese firms.
"China has become the third-largest country by the number of companies listed on NYSE Euronext, following the United States and Canada," said David Ethridge, senior vice-president and head of capital markets at NYSE Euronext Inc at the time.
Ethridge said there will be between 15 and 20 companies listed on the NYSE this year, mainly in the health, high-technology and retail sectors. As of November 30, 2013, there were 74 Chinese companies listed on the NYSE and nine on a smaller subsidiary exchange established specifically for small-cap companies. These companies' total market capitalization stood at $1.04 trillion on that date.
China, Canada and Israel are three major foreign countries on the Nasdaq among its 2,500 listings, said Andrew Hall, managing director of new listings at the NASDAQ OMX Group in New York, earlier this year.
Recent Chinese IPOs include job-seeking website Zhaopin.com on the Nasdaq and Jumei.com, China's largest online beauty products retailer, on the NYSE.
Schuster said the much anticipated Alibaba IPO in the US will be a positive sign for other Chinese firms considering going public in the US market.
"It will open the door for many other Chinese IPOs going forward, assuming that pricing and performance will be in line what the market is expecting," he said.
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