Alibaba Aims to Price IPO Up to $66/Share to Raise over $21B

Alibaba Group Holding Limited is planning to price its initial public offering (IPO) in the United States between $60 and $66 per American Depositary Share (ADS) as it is aiming to raise more than $21 billion.

The Chinese e-commerce giant’s iPO could bring its valuation to approximately $163 billion, which makes its public offering that largest in the history of the technology industry in the United States.

Alibaba will be selling 123.1 million ADS during its IPO. The company will be trading its shares at the New York Stock Exchange (NYSE) under the ticker “BABA.”

Earlier this month, it had been reported that Alibaba’s management is planning to launch its debut on September 8, and start trading on September 18 or 19, according to people familiar with the matter.

Some analysts anticipated that Alibaba would seek to bring its valuation to more than $200 billion, making it one of the 20 largest publicly traded companies in the U.S. There is a possibility that the company’s management would eventually price its IPO higher than its target range if there is a sufficient demand from investors.

Alibaba is expected to conduct a two-week roadshow to offer its IPO to individual and groups of big investors in Asia, Europe and United States. A previous report indicated that it would start its roadshow in Hong Kong. However, Reuters indicated that it will begin pitching its debut to investors in New York on Monday.

Brian Hamilton, chairman of Sageworks, a private company analysis firm commented, “This number may seem enormous, but when you look at the value compared with the company’s fundamentals, it’s not as rich as we might expect.”

Alibaba’s founder and executive chairman, Jack Ma will make the decision regarding the final price of its IPO after the roadshow.

In a letter to investors, Ma emphasized that a Chinese internet company like Alibaba is expected to encounter skepticism from different directions when it enters the global scene due to differences in cultural perspectives, values and geopolitical positioning.

In addition, Ma said, “While it may be difficult for a public Alibaba to side-step controversy, we hope that controversies generate constructive debate and add fresh perspectives to the dialogue on globalization.”

Alibaba disclosed in its latest prospectus that it incurred approximately $16 million in IPO-related legal fees, which is considered unusually high for a public offering. Its corporate structure is also unfamiliar as it gives authority to a group of partners to nominate a majority of its board. The Securities and Exchange Commission (SEC) and investors requested Alibaba to amend its IPO filing and disclose the names of its 27 partners. The company changed its filing to comply with the request.