Alibaba Group has decided to pursue its long-awaited blockbuster initial public offering of shares in the US instead of Hong Kong, the company said on Sunday.
The e-commerce company – whose IPO this year could fetch as much as $15 billion – said listing in the US will make it "more of a global company and enhance [its] transparency, as well as allow the company to pursue its long-term vision and ideals."
It is targeting an IPO in the third quarter and could start filing paperwork with US regulators as early as April, according to media reports.
Alibaba said it may consider a dual listing in China and will continue to keep track of developments in Hong Kong.
"Should circumstances permit in the future, we will be constructive toward extending our public status in China's capital markets in order to share our growth with the people of China," Alibaba said in a corporate blog. "We respect the viewpoints and policies of Hong Kong and will continue to pay close attention to and support the process of innovation and development of Hong Kong."
Alibaba is reportedly in discussions with six banks about bookrunning the deal, namely Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan and Morgan Stanley.
Alibaba did not have an immediate response when contacted by FinanceAsia on this and other related issues.
Investment bank chiefs have for months been travelling to Hong Kong and Alibaba’s headquarters in Hangzhou to meet management and pitch for a role on the deal. And speculation has long been rife over where the Hangzhou-based Alibaba would list.
So the decision to go with the US will be a blow to Hong Kong, which had been seen as the preferred location for China's largest e-commerce company.
Alibaba's management structure – which allows for senior management to maintain control of the board of directors – was a sticking point for Hong Kong, as the city's exchange prohibits dual-class share structures that give shareholders more than one vote per share. The listing committee in Hong Kong is in early-stage discussions about holding a forum on the dual class issues but nothing formal has been scheduled.
Yahoo and Japan's Softbank Corp own 24% and 37% stakes, respectively, while Alibaba's founders and senior management account for 13%.
China internet boom
International investor interest in Chinese internet companies has taken off. China's largest Twitter-like service Sina Weibo is the latest to unveil plans to list in the US.
But Alibaba is unique. Jack Ma, a former English teacher, and 17 others founded the company 14 years ago as an online platform that connected international businesses with Chinese suppliers.
It has since grown into an e-commerce giant currently valued at $140 billion, which boasts more inventory than Ebay and Amazon combined and is involved in almost every aspect of online shopping, including three major online market places, search engines, payment systems, micro-loans, delivery logistics and data collection.
Alibaba also has a cloud-based mobile operating system and sells TV set-up boxes to bring online shopping into Chinese living rooms, as well as Taobao, a sales platform for both individuals and small-scale entrepreneurs.
Plus it continues to diversify its online financial services. In February, it launched a platform of wealth management products that offered investors Rmb5,800 million (US$943 million) of one-year products with an expected annualised return of 2.5%-7%.
The product was sold out in three minutes, bought by more than two million users.
