Chinese Giant Alibaba Will Go Public, Listing in US

Discussion in 'China' started by t_co, May 7, 2014.

  1. t_co

    t_co Senior Member Senior Member

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    http://dealbook.nytimes.com/2014/05/06/alibaba-files-to-go-public-in-the-u-s/

     
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  3. Compersion

    Compersion Senior Member Senior Member

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    Japan's SoftBank won't cash in Alibaba stake on market debut | Reuters

    34.4 percent holding in Alibaba valued at more than $50 billion after the initial public offering.

    100 - 34.4 = 65.6 %. Out of 65.6 % how much is in the USA open market. And who are all the other shareholders. Who would have the most shares. Who would be the promoter. If 34.4% is the largest holding - The Company would be nearly Japanese definitely not Chinese if you take into consideration the open market and other shareholders. Also why was the listing not done in Hong Kong. No offense but the only gainers in Alibaba at this moment are non-Chinese and it is a watershed moment for Yahoo.

    This is the case-study for Foreign Investment into PRC - How foreigner can make money. Give the PRC individuals a small stake worth billions but keep majority control and show the PRC economy is big and large turnover today. There is no and little PRC State Investment and most large enterprise need license and permission from the State to do business in PRC (in conclusion Alibaba is dependent on PRC state to make money if any at all). What is the intrinsic value of this license for Alibaba and who holds it (that makes it a Chinese company and hence the two-stage ownership structure) since the person that holds 1% might hold 100% of the license to do business in PRC.

    I am most curios why it was not listed in Hong Kong and PRC. I understand two-class structure but that can be overcome in Hong Kong and PRC especially with the large numbers mention.
     
    Last edited: May 7, 2014
  4. amoy

    amoy Senior Member Senior Member

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    @Compersion Rumor: HKSE Rejects Alibaba IPO Rule Exception | Marbridge Consulting - China Internet News Thus it opts for NASDAQ
     
    Last edited by a moderator: May 10, 2015
  5. nimo_cn

    nimo_cn Senior Member Senior Member

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    alibaba is basically owned by Japanese and American, it makes perfect sense to be listed in the US.

    Sent from my HUAWEI T8951 using Tapatalk 2
     
  6. Compersion

    Compersion Senior Member Senior Member

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    @nimo_cn

    Thanks for information but the question is why the 2 class ownership structure and why in USA. what i am trying to allude is that why this was not accepted in hong kong and allowed in USA. Also how does one become a "Partner" in Alibaba. Everyone knows that to do business in PRC one needs State approval and licence. You cannot do business in PRC without State patronage. How does Alibab get and achieve that. That is why this is a different and a special foreign investment into PRC. And one needs to look closer at who the "Partners" are and not the "Owners". The owners are the ones that own the shares and economic benefits accordingly but the Partners are the ones that own the license and authorization to do business in PRC. There is a spread between actual ownership and being a Partner. Is the Partnership position representative and proportional to ownership. Is being Partner only if one owns a minimum number of share.

    The means it can be someones that only is a 1% owner but can have 100% of the licence (without him - her the PRC government would not allow Alibaba to do business in PRC). What is the worth of the 1% share of Alibaba to this person that is the reason why Alibaba is allowed to do business in PRC. Is it worth the price on stock exchange. Are the Partnership shares listed. is the licence resting with a legal entity is it resting with a individual(s).

    The "Owners" want to capitalize on their worth but they were not allowed in Hong Kong. My question is would the USA legal system allow such a ownership where the "Partners" do not correspond and harmonize with the "Ownership". Alibaba has opened itself to USA legal system predominance.

    Alibaba is a Japanese and American company but according to the "Partners" it is a PRC company. But the company is Owned by Japanese and Americans and listed on American USA Stock Exchange and open to USA legal System. This is a new and special foreign investment and the benchmark is that others have "Ownership" but PRC holds the "License". The License can be taken away and given at anytime. What is the true value of Ownership ... One can imagine there will be a clash between the Owners and Partner(s).

    Will the American legal system accept this "Separation of Powers" system. Hong Kong said no - the question is what will Americans do. The figures mention are astounding. I also have to admire a little whoever thought this through from PRC in modern economic structure is pretty creative.
     
    Last edited by a moderator: May 10, 2015
  7. amoy

    amoy Senior Member Senior Member

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    @Compersion dont talk naively as if there were laissez faire on this planet where no "state license and approval" is required for investment except in China. even in the 3rd largest economy India your messiah Modi / BJP, as far as I rememember, is hostile to FDI in multibranding retail, which annoyed Aunt Hillary and Walmart.

    there's usually an exit strategy underlying their preference for HKSE or NYSE for PEs like Softbank and Yahoo when they kickstarted their venture in Alibaba in its bud many years ago. furthermore Shanghai or Shenzhen bourses have thresholds such as consecutive xx years of profitability, and now EPS/index/performance is all time low (meaning IPO cant raise as much money) with still many IPOs in the queue pending for go-ahead. consequently Alibaba heads for NYSE/NASDAQ like most Chinese ecommerce firms do including Sina, Tencent and so on that u can easily search.


    Sent from my 5910 using Tapatalk 2
     
    Last edited by a moderator: May 10, 2015
  8. Compersion

    Compersion Senior Member Senior Member

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    I think you have failed to grasp the point. Usually the "State license and approval" is held with the Legal Entity - The Company and the Ownership of that company is done by looking at the shareholding - who actually owns the animal. This Alibaba is a new model of doing business in PRC where the state license and approval is not with the "Owners" but with the "Partners". The Partners are not the "Owners" since like mentioned earlier the Japanese and Americans own the majority of the "Ownership". But the "Partners" have extra and special powers. What and why are these powers with these "Partners". Whats special about the "Partners". Have you read the listing documents (i have not).

    It can be a good thing it is a out-of-the box thinking. The Ownership is with others while the authorization to do business in PRC is with "Partners". I would be naive if I said doing business in PRC does not require State approval and patronage.

    Also fascinating to read: Who owns Sina. Is this a expansion of the new approach for foreigners doing business in PRC - dual class structure:

    Sina Weibo - Wikipedia, the free encyclopedia

    Like you said that it is acceptable for States to control who and how business is done. That is fine. But in PRC everything needs to have State Involvement and from my understanding that is near absolute. Whereas in India you will see more Private participation and observation of rules and procedures and laws. In Hong Kong probably you will see more Private Participation but again one knows who the "Owners" are.

    You mention Tencent ... who are the owners for Tencent. And how does the State control the "Owners". With Sina it is easier since it is established that the License is with the Company and the Entity is not owned majority by foreigners:

    Sina Corp - Wikipedia, the free encyclopedia

    You might be right that certain institutions wanted to exit and this dual class structure was a way to maintain control by PRC since Alibaba main and primary business is in PRC. Yet it is being listed in USA because of PE exit strategy (according to you) even though it was first tried in Hong Kong. Do you know when a Company lists the shares does everyone sell the shares and get money. You must be naive to think that. Most of the owners have got a market value but not money on their shares. But what about the "Partners". If we go into why PRC lists shares in USA (it touches on credibility and participation) this would get side-tracked.

    Japan's SoftBank won't cash in Alibaba stake on market debut | Reuters

    Who has exited and why in the USA. Alibaba with its dual class ownership structure and special approach to doing business in PRC. And one thing that Alibaba did not have before the listing it is the beautiful girl called the Legal System in USA - welcome to America.

    Alibaba IPO plans: Many questions unanswered

     
    Last edited by a moderator: May 10, 2015
  9. amoy

    amoy Senior Member Senior Member

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    Comparatively speaking Chinese economy is much more open than Indian

    Alibaba's Prospectus Gives Peek inside the E-Commerce Giant -

    Excerpts

    Revenue and Profits
    Operations in China generated more than 84 percent of its revenue in 2013. Alibaba did not reveal a revenue and profit breakdown for its individual sites because, the prospectus said, this would be "placing specific financial targets for individual businesses or managers would create barriers against cooperation."

    Alibaba reported net income of US$ 2.85 billion for the nine-month period ending December 31.
    [​IMG]

    Going Mobile
    Mobile Internet has become a larger part of Alibaba's sales. Transactions made through its apps comprised 19.7 percent of the company's total in the last quarter of 2013. The figure for the same period a year earlier was 7.4 percent. The company said it handled 1 billion yuan worth of transactions on its mobile sites in the first hour of a popular sales day in November. Despite this, analysts say WeChat, the popular messaging app from Tencent Holdings, has become a serious threat to Alibaba in the mobile arena.

    Who Owns Alibaba?
    Ma and vice chairman Joseph Tsai are the individuals with the biggest stakes in Alibaba. The rest of Alibaba's executives together hold less than 1 percent of the company. Alibaba is using a dual-class share structure to secure voting power for its executives. At a valuation of US$ 150 billion, Yahoo's 22.6 percent stake would be worth about US$ 34 billion. Alibaba will have the right to buy back up to 12 percentage points of Yahoo's stake if the company lists before December 2015, based on an agreement the companies signed in 2012. Japan's SoftBank Corp. will continue to own more than 30 percent of the company, the filing said.

    [​IMG]

    The IPO process will take a few months to complete. Alibaba has not said whether it will list on the Nasdaq or New York Exchange.
     
  10. Compersion

    Compersion Senior Member Senior Member

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    Comparatively speaking Chinese economy is much more open than Indian - are you serious when you make such a statement. Whats the source be serious man.

    With respect to Alibaba you have pointed out fascinating information. For example 30.5% is owned by "Others". Who are these others since the company is Privately owned at this moment. But that still is far away from the issue - Who are the partners and how and why are they "Partners".

    There is a important quote you mention "Alibaba will have the right to buy back up to 12 percentage points of Yahoo's stake if the company lists before December 2015, based on an agreement the companies signed in 2012.".

    Perhaps Alibaba will buy(back) the shares from Yahoo and only list a small amount in USA to get a "value". That also can explains why Yahoo is selling such a amount.

    The figures are really massive. The Net Income is incredible.

    The question is who is the mastermind behind Alibaba. Is it the 3.6% and 8.9% is it the 34.4% and 22.6%. Because there is going to be a dual-class ownership one can only question and imagine. But the Partners are the reason why Alibaba can do business in PRC and not because of the "Owners".
     
    Last edited: May 8, 2014
  11. amoy

    amoy Senior Member Senior Member

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    @Compersion I'm serious when stating Comparatively speaking Chinese economy is much more open than Indian

    Pls look at a few cold facts -
    * many top notched Chinese companies are listed in NYSE/NASDAQ, Singapore, Germany, and so on. Can u name an Indian IPO in any of them?
    * India has been reluctant to open up retail to FDI (ref. http://defenceforumindia.com/forum/...-multi-brand-retail-sector-discussion-51.html ) while China is a paradise for Walmart Carrefour and their likes
    * China attracts FDI xx times of India - is it self explanatory for "openness"?
    [​IMG]

    Do u still deny my conclusion?
     
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  12. Compersion

    Compersion Senior Member Senior Member

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    1. How you define a indian ipo, can you give me a example of PRC ipo in such places. Are you talking about infosys ADR And dr reddys. Are you talking about indian company listed overseas like a Vedanta. What are you talking about. And what's that got to do with openness. Are you talking about a arcelor mittal conglomerate that has a indian majority shareholder that has experience working in many regions. Are you talking about a novelis. Are you talking about the head count of Fortune 500 companies in india compared to PRC. What are you talking about. It must be a tata motors that has jaguar range rover subsidiary but is not listed. The Bombay stock exchange is the oldest in asia and the regulator of stock exch age in india is much more renewoned and able compared to PRC. What's the fdi level going into PRC stock and stock exchange. Indians company don't need to go list overseas since they list in india and it is working well and fine.yes indian companies go overseas to get funds and advise and business opportunities but not to get listed because it is only alternative (alibaba) and Also india firms don't need to focus on the country image and themselves for credibility and go to overseas stock exchange.

    2. PRC figures on the fdi is not credible. Walmart, Carrefour, and their likes manufacture cheap goods in PRC and that is their primary focus not consumer sales to PRC people.

    3. The graph you show is with the important words "world bank". But does that figure of fdi explain where the money is coming from. Also how PRC define fdi. everything is wonderful and great In PRC.

    Is there anything wrong and can be better in PRC. Where is the openness. You are on a india defence forum and there is openness here and people talk and critise things that happen in india. You just be following our elections that are open and wonder why people vote.

    Finally I give you a example and test your intellect. A alibaba ipo compare to a infosys ADR. Which is better.

    Focus in alibaba I am most interest to know why there is a partnership and dual ownership structure since the ownership is mostly Japanese and Americans.

    I have no complaints and issue with PRC. In fact I am impressed if the dual structure is origin from PRC thinkers. But the issue is the USA legal system but would they jeopardise the yahoo value is the question.
     
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  13. Compersion

    Compersion Senior Member Senior Member

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    At China's Alibaba, chairman Ma's dealings raise red flags | Reuters
    .

    Who is the true owner of alibaba
     
  14. esolve

    esolve Regular Member

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    In this regard, Samsung is a USA company coz it is owned by USA
     
  15. nimo_cn

    nimo_cn Senior Member Senior Member

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    it's a well known fact that Japanese softbank and American Yahoo are two of the largest share holders of alibaba, any idea about the share structure of Samsung?

    Sent from my HUAWEI T8951 using Tapatalk 2
     
  16. esolve

    esolve Regular Member

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    54% owned by foreigners

    SAMSUNG
    Ownership structure of Samsung Electronics as of the end of December, 2013
    [​IMG]
     
  17. ninja85

    ninja85 Regular Member

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  18. anupamsurey

    anupamsurey Regular Member

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    i dont know what is the big deal about alibaba, the interface sucks, there is no proper representations of products, i personally prefer flipkart and infibeam, sometimes myntra, it looks like entire chinese population uses alibaba and hence the big userbase, personally i feel that it is like having a maruti 800 in 1990s
     

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