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Alibaba could say ‘open sesame’ for Chinese IPOs
Speculation is building that Alibaba, the Chinese tech giant, will raise around USD 15 Billion from an IPO in New York later this year. The company has grown to dominate Chinese e-commerce since it was founded in 1999. It operates the largest online consumer marketplace in China: Taobao. Online sales have flourished on Taobao, which now offers a paypal like service called Alipay. The Chinese government recently chose Alibaba to be among a group of companies taking part in a pilot project testing private banks in the Communist run country.
Saxo Bank's Head of Equity Strategy Peter Garnry says: "Alibaba is still very secretive and gives out little in the way of information to the public. We know the company had third-quarter 2013 revenue figures of USD 1.78 billion with year-on-year growth rates coming down for two quarters straight. Given the current trajectory of sales, Alibaba is likely to make USD 9.1 billion over the coming 12 months which, with the valuation range of USD 150-200 billion, gives it a valuation of 16 to 22 on a price-to-sales ratio."
Yahoo is one US internet firm already benefitting from its twenty four percent stake in Alibaba. Yahoo stock has surged on the news of the possible IPO despite underlying concerns about the Yahoo business model.
Perhaps most significantly, after falling out with regulators on Hong Kong over management structure proposals, Alibaba has chosen to launch its IPO in New York. a move which could say 'open sesame' to other big Chinese firms looking for a global profile.
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