Alibaba Group Holding Ltd and the bankers have yet reached a final decision in expanding the fundraising size, but “the addition of new Alibaba shares could help push the IPO beyond $20 billion, potentially topping Agricultural Bank of China Ltd’s record $22.1 billion offering in Shanghai and Hong Kong in 2010,” Wall Street Journal reported, citing anonymous sources.
The move will also help Alibaba outstrip the largest IPO in the US, when Visa Inc. raised $19.7 billion in an offering back to 2010, the report added.
China is currently the second largest e-commerce market in the world. A report by the research firm McKinsey expects the country’s e-commerce to exceed $420 billion by the year of 2020, double from $210 billion registered in 2012.
As the country’s largest e-commerce company, Alibaba, founded in 1999, currently accounts for almost four-fifths of all of China’s online spending, a Sina news report said.
The company in March announced to kick off the process for being one of the biggest initial public offering in the US, after it failed to persuade Hong Kong regulators to approve its proposed governance structure in almost a year.
A number of international investment banks, including Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc have “teamed up” in the offering to share the huge cake as Alibaba is reportedly to pay at least 1.1 percent of the total IPO proceeds in fees, which means the potential fee pool will exceed $220 million if the IPO size is scaled $20 billion, a Bloomberg news said earlier.
The move to add shares in its offering in the US would enable Alibaba to raise funds for itself alongside some of its current investors, Wall Street Journal said, which added that it also risks diluting existing holders’ stakes value.
On Friday, Alibaba’s co-founder Jack Ma and CEO Joe Tsai, also announced in a statement that they have established two trusts to improve the environmental, medical, education and cultural causes in China.
The trusts will be funded by share options worth about 2 percent of the group, Alibaba said, without giving a value for the investment. Reuters expects the value to reach $3 billion, making it one of the biggest in Asia.