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Alibaba IPO
Alibaba IPO
ALIBABA.COM
- IPO
This assignment
contains Alibaba IPO
details, one of the most
successful Chinese ecommerce
conglomerate about its
first issue of shares
(initial public offering)
in New York Stock
Exchange Market in
September 2014
"We've got hundreds of thousands of orders,'' Cutler told CNBC an hour into the delay."We're
chasing to find sellers. Even at these levels, there doesn't appear to be a lot of sellers."
Most shares were allocated to large institutional shareholders, not individual shareholders.
Shortly after opening for trade, Alibaba shares surged to $99 per share, or up more than 45%
from its IPO price.
On Monday, 22nd September 2014, the company announced that underwriters had exercised an
option to purchase additional shares at the $68 IPO price, boosting the total amount raised by
Chinese e-commerce giant and its selling shareholders from $21.8 billion to $25 billion. Bankers
bought an additional 48 million American depositary shares, taking the total amount of shares
sold in the offering to 368 million, or about 14.9% of the company.
In raising $25 billion, Alibabas IPO surpassed the 2010 offering from the Agricultural Bank of
China, which raised $22.1 billion in it debut on the Hong Kong Stock Exchange. Alibaba was
able to sell more shares due to its over-allotment, or greenshoe, option, which allows
underwriters to placate investor demand for the stock by obtaining more shares from the
company at the IPO price.
GREENSHOE or OVERALLOTMENT
Existing shareholders Alibaba Chairman Jack Ma, Vice Chairman Joseph Tsai and Yahoo YHOO
-0.86% provided the extra shares sold in the over-allotment. Ma sold an additional 2.7 million
shares, selling a total of about 15.5 million shares in the IPO, while Tsai sold 5.2 million shares,
after offloading an additional 900,000 shares in the greenshoe.
By selling in the over-allotment, Yahoo became the largest seller in Alibabas IPO, surpassing the
123 million shares offered directly from the Hangzhou-based company. Yahoo sold an additional
18.26 million shares, offloading a total of 140.3 million shares in the IPO for more than $9.5
billion in pre-tax cash.
Alibaba began trading on Friday on the New York Stock Exchange, with shares opening up at
more than 35% above the $68 IPO price. On Monday, shares have fallen below the $90 mark,
down more than 4% in intraday trading.
UNDERWRITERS
Citigroup Inc, Credit Suisse Group AG, Deutsche Bank, Goldman Sachs Group Inc,
JPMorgan Chase & Co and Morgan Stanley acted as joint bookrunners of the IPO. They
emerged as winners for the honor of running an I.P.O. that could ultimately end up raising
more than $20 billion.
They earned $300 million in fees, taking home 1.2 percent of the proceeds.
Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan
Chase & Co. and Morgan Stanley each earned 15.7 percent of the fees, while Citigroup
Inc.s share represented 7.9 percent, the filing shows. Alibabas 28 other underwriters
received 1 percent or less apiece.