Alibaba founder bares partnership model before IPO

Written by Reuters | Hong Kong | Updated: Sep 11 2013, 07:07am hrs
Alibaba Group founder Jack Ma revealed details of its internal partnership structure on Tuesday, ratcheting up pressure on Hong Kong regulators as they grapple with the ecommerce giants initial public offering plans. The two sides are debating the ability for Alibaba to list in Hong Kong and, at the same time, allow its partners a group of founders and senior employees to keep control over the makeup of its board.

Hanging in the balance for Hong Kong is the highly anticipated offering, which could be the largest technology IPO since Facebooks $16-billion listing last year.

Ma sent a company-wide email on Tuesday, formally announcing for the first time details of the partnership model and explaining the importance of maintaining the system. The contents of the email were confirmed by an Alibaba spokesman. Alibaba wants to keep key decisions with its partners by giving the group made up of 28 senior employees the right to nominate a majority of its board.

Regulators in Hong Kong, however, are concerned the structure would give too much voting power to Alibabas founders and senior managers and not enough to outside investors.

The partnership was designed to safeguard the culture of innovation and protect the company from the temptation to seek short-term gains, Ma said. The partnership is not aimed to exert greater control over the company, he wrote.

Mas comments add pressure on the Hong Kong regulators to allow Alibaba Holding to list with its partnership scheme in place. The company has been lobbying regulators to allow the company to keep the partnership system intact after its planned IPO, but the companys efforts have so far met with resistance, according to Hong Kong media reports.