Alibaba?s IPO in the US didn?t end up the largest ever, as it was being billed by market watchers for a long time?one of the reasons is that the Chinese
e-tail giant has priced its share conservatively considering the appetite for it, at $68 apiece. But it stands to come quite close?raising $21.8 billion, it is the third-largest ever and the top tech IPO. Alibaba has managed to stoke considerable investor interest, despite experts? warnings about its opaque corporate governance, and the ?variable interests entity? structure for its listing that leaves investors with no control of the company; founder Jack Ma and a handful of other Chinese citizens retain effective control of assets, thanks to China barring foreign ownership of Chinese companies. What is striking is that the company, responsible for 80% of the online sales in China, is virtually unknown in the US?a poll conducted for Thompson Reuters found 88% of the respondents hadn?t heard of the company. But then, it is mostly institutional investors who will be buying up the shares.
What has perhaps held interest in Alibaba aloft in the face of the concerns is, unlike what the case was with other big-ticket tech IPOs in the last couple of years, viz. a Facebook?s or a Twitter?s, investors aren?t worried about the company?s revenue streams. The fact that Alibaba makes $8.5 billion in annual revenues in China alone must have spurred confidence. At the same time, a maze of holdings in other companies like Alipay and Taobao, would have been seen as Ma?s ultimate fallback plan. The Alibaba monolith?s dominance is so near-complete in its domicile that Chinese tech companies Baidu, Tencent and Wanda are reportedly coming together to cobble up a challenger to Alibaba for China?s e-commerce space. However, the company must build its brand outside China if it is to put itself in the reach of retail investor.
