Chinese e-commerce giant Alibaba (BABA) opened at $92.70 in its Friday debut, a 36% boost, after pricing its initial public offering at the high end of the range at $68 per share. Releasing 320 million shares, Alibaba raised $21.8 billion, surpassing Visa to become the largest U.S. IPO ever.
“I feel excited and honored and I also feel very humbled,” Executive Chairman and founder Jack Ma told FOX Business in a televised interview. “It’s a great blessing from the world and we are so excited by the trust we got today.”
Ma personally owns 9% of Alibaba, a stake worth about $14 billion at the offering price. A marked change from his salary in his schoolteacher days, Ma says he does not plan to increase his expenditures. “The money I got it’s the trust people of me. They think I can spend money better than most people.”
At its initial offering price, Alibaba is set to command a market value of $168 billion, above U.S. rivals like Amazon (AMZN) and eBay (EBAY), but beneath internet giants like Facebook (FB) and Google (GOOG).
Alibaba’s largest shareholders include Japanese telecommunications corporation SoftBank, which owned 34% pre-IPO and Yahoo (YHOO) which had a 22% stake, but reduced it to 16% in the IPO. Yahoo’s market value has been closely linked to its Alibaba investment.
Companies in the IPO pipeline will be watching Alibaba closely and a favorable trading performance could encourage other firms to list. Large offerings like Alibaba are considered a bellwether for the “IPO window.”
In recent years, U.S. investors were skeptical of Chinese IPOs, following several accounting scandals. But increased scrutiny has led to renewed investor confidence in Chinese stocks, with new Chinese listings performing better than any other segment of the market this year.
Some are speculating that Alibaba, which has seen remarkable growth in its fifteen years as a company, will use some of the proceeds from the offering to be more acquisitive, buying up startups to expand its presence in the U.S.
In addition to the $21.8 billion raised in its offering, the company could stand to gain $25 billion if the full over-allotment is exercised. It would then surpass the Agricultural Bank of China to become the largest IPO in the world.
The IPO was led by Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan and Morgan Stanley. Rothschild also served as an independent equity advisor to the company.
Follow Katie Roof on Twitter @Katie_Roof
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