Alibaba's Historic U.S. IPO Could Raise US$24.3 Billion

Internet behemoth Alibaba Group Holding Ltd. plans a historic U.S. initial public offering that could make it the third most valuable Internet company traded in the U.S. after Google Inc. and Facebook Inc.

Alibaba makes its money primarily by charging advertising fees to merchants looking to promote themselves in the company's massive online marketplace that has a total of 279 million active buyers and 8.5 million active sellers.

The shares are expected to begin trading on the New York Stock Exchange on Sept. 18, under the symbol "BABA." Alibaba and selling stockholders plan to sell 320.1 million American depositary shares for $60 to $66 apiece.

If the company sells the maximum number of shares proposed at the highest price currently anticipated, the deal would raise $24.3 billion for Alibaba, its executives and early investors.

Alibaba and selling stockholders, including Yahoo, Inc., plan to sell 320.1 million American depositary shares for $60 to $66 apiece.

The Chinese e-commerce company is seeking a valuation of as much as US$162.7 billion, larger than 95 percent of the Standard & Poor’s 500 Index. However, Alibaba's worth could rise in the days ahead as the company officially introduces itself to investors in a roadshow.

The Wall Street Journal says Alibaba may temper its valuation to avoid a listing flop. Facebook had a price tag of $104 billion at the time of its IPO in May 2012 and went on to lose half its market value. But the stock has since recovered. Now, Facebook trades at about double its IPO price.

The Hangzhou-based company is far more profitable than many of its American Internet counterparts, generating 43% operating profit margins in the second quarter, according to the Journal.

Alibaba’s sale could exceed Visa Inc.’s $19.7 billion IPO in 2008, the biggest U.S. initial offering to date.

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