(Sept 22) : Alibaba Group Holding Ltd.’s initial public offering will become the biggest ever at $25 billion, after bankers exercised an option to boost the deal size by 15 percent on strong demand, a person familiar with the matter said.
The underwriters exercised a so-called greenshoe option to sell an additional 48 million American depositary shares, said the person, who asked not to be identified as the information is private. The Chinese e-commerce company’s sale, already the biggest in the U.S., surpasses Agricultural Bank of China Ltd.’s $22.1 billion offering in 2010 as the world’s largest, according to data compiled by Bloomberg.
Shares of Alibaba soared 38 percent on their Friday trading debut, the biggest first-day jump for an IPO of at least $10 billion, the data show. The company marketed the offering at a discount to its Chinese peers, attracting interest from money managers including Fidelity Investments, BlackRock Inc. and T. Rowe Price Group Inc. who each asked for at least $1 billion of shares, people familiar with the matter said last week.
Alibaba, led by billionaire chairman Jack Ma, has profited from China’s burgeoning consumer class by dominating the e- commerce industry in the country of 1.36 billion people. It surpassed Facebook Inc. by market capitalization from the minute it started trading and closed with a valuation of $231.4 billion, making it larger than Amazon.com Inc. and EBay Inc. combined.
Investor Crowds
Florence Shih, a Hong Kong-based spokeswoman for Alibaba, didn’t immediately return a call seeking comment. The Wall Street Journal reported earlier today the company had exercised the greenshoe option, citing unidentified people.
Before the greenshoe option was exercised, Alibaba was already the largest U.S. IPO, ahead of Visa Inc.’s $19.7 billion first-time share sale in 2008, data compiled by Bloomberg show. It was able to break the record with the support of large investors, as nearly half the shares were placed with just 25 funds, people with knowledge of the matter said last week.
Alibaba drew crowds of money managers to meetings held around the world as the company pitched itself to investors this month. As many as 800 people turned up to the first event at New York’s Waldorf Astoria hotel.
Hangzhou Apartment
Ma, who started Alibaba from his Hangzhou apartment in 1999 with $60,000, watched his net worth swell to $26.5 billion as the shares rose, according to the Bloomberg Billionaires Index. The 50-year-old former schoolteacher is China’s richest man, trailing only Hong Kong property tycoon Li Ka-shing among Asian billionaires.
Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc. managed the offering. Simpson Thacher & Bartlett LLP and Sullivan & Cromwell LLP provided legal advice. Rothschild was Alibaba’s IPO adviser.