Alibaba Shows Its Secret Sauce in IPO Filing

Alibaba Group Holding Limited has finally filed its paperwork with the Securities and Exchange Commission to conduct an initial public offering in the United States. The IPO will be much larger, but the filing amount is initially for up to $1 billion in common stock. Yahoo! Inc. (NASDAQ: YHOO) has a lot riding on this, as does Softbank in Japan.

Alibaba is the largest online and mobile commerce company in the world in terms of gross merchandise volume in 2013. It operates as a platform for third parties. It does not engage in direct sales, nor does it compete with its merchants or hold inventory. Alibaba had revenue of $5.55 billion in 2013, with net income 1.39 billion. The company also had some 20,884 employees at the end of 2013. The company’s cash and cash equivalents was $7.88 billion at the end of the year.

This was one of our top ten IPOs to watch in 2014, and realistically it may be the most important of all. No designation has been made for a ticker, and it has not yet chosen between a listing on the New York Stock Exchange or on the NASDAQ.

The underwriting group is not very large considering the size of the company. Underwriting managers are listed as Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley, and Citi.

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Some of the company’s claims are 136 million mobile active users, some $248 billion in gross market value on its China retail market places, 11.3 billion annual orders, 231 million active annual buyers, and$37 billion worth of gross market value from mobile orders.

CEO Jack Ma has 206 million shares or 8.9% of the ordinary shares. Softbank holds over 797 million shares, or 34.4% of the ordinary shares. Yahoo! Inc. (NASDAQ: YHOO) owns more than 523 million shares or 22.6% of the shares. The filing assumes that there were 2,321,114,237 ordinary shares outstanding as of December 31, 2013.

As a reminder, by filing in May this suggests a public offering in summer – perhaps even in August. That is not the easiest time around the world to get big IPOs out to market.