Tags: Alibaba | China | Initial Public Offering | Road Show

US Investors Line up in Droves to Hear Alibaba's Pitch

Monday, 08 Sep 2014 02:22 PM

Hundreds of hedge funds, mutual funds and other institutional investors lined up on Monday to hear Alibaba Group Holding Ltd.'s management pitch the company's shares, as the Chinese e-commerce giant kicked off a two-week IPO marketing blitz.

The line for people waiting to take the elevators at the Waldorf Astoria hotel in New York snaked down to the basement, in one of the clearest signs yet of the company's appeal to investors. Among the investors attending the event was Mario Gabelli, CEO of Gabelli Asset Management.

Alibaba is seeking to raise more than $21 billion in an initial public offering that will value the company at up to $163 billion and rank as the largest-ever technology debut in the United States. Alibaba expects to price the IPO at $60 to $66 per American Depository Share. It will list shares on the New York Stock Exchange and start trading later this month.

While the enthusiasm for the event was high, several investors said they had come with a series of questions about Alibaba, ranging from concerns about its corporate governance and transparency, to plans for U.S. acquisitions and growth.

"They have so many businesses, but how do they actually execute?" asked one hedge fund manager, who declined to be named because he was not authorized to speak to the press.

Many investors who own stock in Internet companies such as Facebook Inc., Amazon.com Inc. and eBay Inc., had said they will have to decide whether it is worth making room for Alibaba.

Industry analysts had expected Alibaba to try for a valuation in excess of $200 billion, ranking it among the 20 largest publicly traded companies in the United States. The multi-city marketing effort will determine whether Alibaba, widely seen as one of the hottest technology IPOs of the year, will price above the initial range and come closer to that valuation.

Credit Suisse Group AG Chief Executive Brady Dougan is expected to introduce management on behalf of all the underwriters. Alibaba will then present, with most of the time dedicated to a question-and-answer session, said a source familiar with the matter.

Earlier on Monday, the company made its presentation to about 300 salespeople for the six banks underwriting its offering. They gathered at Citigroup Inc.'s offices on Greenwich street in Lower Manhattan for an hour, according to the source familiar with the meeting.

Besides Citigroup and Credit Suisse, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley are the joint bookrunners for Alibaba's IPO. Rothschild is Alibaba's independent equity adviser.

Alibaba Executive Vice Chairman Joe Tsai fielded questions and did the main presenting to the sales force at the Citigroup meeting, according to the source.

An Alibaba representative declined to comment.

Alibaba accounts for about 80 percent of all online retail sales in China, where rising Internet usage and an expanding middle class helped the company generate gross merchandise volume of $296 billion in the 12 months ended June 30.

Revenue in the June quarter increased 46 percent to $2.54 billion from a year earlier, faster than the 38.7 percent growth in the previous quarter.

Alibaba is selling 123.1 million of the 320.1 million ADS shares slated for the IPO. Shareholders including Yahoo Inc., founder Jack Ma and Tsai are offering the remainder.

The company has attracted its share of controversy, which has kept some investors on the sidelines. Some have said they were cautious about conflicts of interest between founder Jack Ma's role as a steward of the company and his investment interests elsewhere.

In the past, Alibaba's governance has also become an issue with major shareholders Yahoo and Softbank Corp., which both objected when the company hived off lucrative payments unit Alipay.

The company plans a Tuesday presentation at the Four Seasons hotel in Boston, according to a person who saw an invitation.

© 2017 Thomson/Reuters. All rights reserved.

 
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Hundreds of hedge funds, mutual funds and other institutional investors lined up on Monday to hear Alibaba Group Holding Ltd.'s management pitch the company's shares, as the Chinese e-commerce giant kicked off a two-week IPO marketing blitz.
Alibaba, China, Initial Public Offering, Road Show
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2014-22-08
Monday, 08 Sep 2014 02:22 PM
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