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IPOs

Alibaba Raising Greed and Fear with Anticipated $24 Billion IPO

Taobao Revises Fee Plan

Alibaba is launching the biggest-ever technology IPO on the New York Stock Exchange (NYSE), pushing a potential $24 billion initial public offering.

The IPO, coming next week, could value Alibaba in the neighborhood of $155 billion, according to the Wall Street Journal. It means this Chinese import would instantly become one of the largest companies listed in the U.S.

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Two years ago, Facebook’s IPO brought in $16 billion, and then tanked. Alibaba is looking to pick up $8 billion more, so it should be interesting to watch whether or not the Zuckerberg experience will leave a mark on this one. Will greed overcome fear?

According to Standard & Poor’s Capital IQ analyst Scott Kessler points out that Alibaba is a “variable-interest entity, ” or “special-purpose entity, ” which means that when you buy Alibaba shares, you don’t actually get a stake in the company, but instead you acquire a stake in an agency based on the Cayman Islands, which receives a share of Alibaba’s profits.

This is not a scheme to steal money from investors, but a scheme to bypass a Chinese law that prevents foreigners from investing directly in Chinese companies.

Alibaba Group is a privately owned Hangzhou-based group of Internet-based e-commerce businesses including business-to-business online web portals, online retail and payment services, a shopping search engine and data-centric cloud computing services.

In 2012, two of Alibaba’s portals together handled $170 billion in sales, more than eBay and Amazon combined. The company operates in the People’s Republic of China.

The group began in 1999 when Chinese entrepreneur Ma Yun (Jack Ma) founded the web site Alibaba.com as a business-to-business portal to connect Chinese manufacturers with overseas buyers.

Alibaba’s consumer-to-consumer portal Taobao, an eBay-type service, features about a billion products and is 11th among the top 20 websites on earth Google is the eternal No. 1, followed by Facebook and You Tube).

China’s e-commerce market is worth about $300 billion a year, and by 2020 it’s expected to be larger than the British, Japanese, German, French and US online markets combined.

Alibaba’s showrooms include many products aimed directly at the Jewish consumer. For instance: Kosher wigs, including Mongolian Virgin hair jewish wig kosher wigs; a multi-colour braid Jewish candle; Happy Chanukah Hat Jewish Menorah Holiday Festive adult Hat (a must on the festival of lights); and, believe it or not,  Jewish Book made from animal skin (or a Torah scroll to you and me).

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