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Tuesday, October 23, 2007

Ali Baba IPO

Chinese e-commerce portal Alibaba.com could raise up to $1.5 billion (€1 billion) in its Hong Kong listing next month, the company said Monday, describing it as the biggest Internet IPO since Google.

Alibaba Group, the company that controls the business-to-business commerce Web site, said it plans to sell 858.9 million shares at an indicative price range of 12 to 13.50 Hong Kong dollars each, up from an earlier initial price of HK$10-HK$12.

Alibaba's charismatic founder Jack Ma, a former English teacher who set up the company in 1999, told reporters the profits would help build a "world-class infrastructure and ecosystem for e-commerce, which will contribute to the sustained growth of the Chinese economy."

Ma was speaking by video phone from the United States where he is drumming up support for the IPO.

Alibaba -- which allows companies in both China and overseas to trade with one another online -- is one of China's fastest growing Internet companies.

It has seen its registered members soar from 6 million in 2004 to 24.6 million in 2007. Paying members increased from 77,000 in 2004 to 255,000 by June 2007.

The company recorded a net profit of 295.2 million Chinese yuan ($39.2 million; € 27.5 million) in the six months ended June 2007.

It expects its net profit to more than triple to 622 million yuan ($83 million; €58 million) from 219.9 million yuan, on strong growth in revenue from both its international and Chinese Web sites.

Unlike other offerings in which most of the shares on offer are newly issued shares, nearly three-quarters of the shares in the IPO are existing shares held by Alibaba.com's parent, Alibaba Group.

About 85 percent of the shares are marked for institutional investors with the rest open to retail investors.

Already, the shares are in high demand, with the South China Morning Post newspaper reporting the institutional tranche was already 50 percent subscribed before the price was raised Yahoo! Inc., which holds a 39 percent stake in Alibaba.com's parent, Alibaba Group, had already agreed to subscribe to about $100 million worth of shares.

Alibaba said another seven "strategic" investors had agreed to take a stake, representing in total about HK$2.3 billion ($296 million; € 207 million)or 20 percent of the offering.

They include Cisco Systems International B.V., AIG Global Investment Corporation (Asia) Ltd., FoxConn (Far East) Ltd. and Industrial and Commercial Bank of China Ltd., as well as investment companies held by Wharf Holdings Ltd. Chairman Peter Woo, Malaysian tycoon Robert Kuok and the Kwok family of Sun Hung Kai Properties Ltd., the company said.

Strong demand from the public -- which can start buying the shares from Tuesday -- is also expected to trigger an extra allocation of 113.67 million shares to raise a total of $1.7 billion (€ 1.19 billion).

Net proceeds from the listing were expected to be about HK$2 billion ($335 million; € 234.46 million), the company said, which would be spent on strategic acquisitions and development initiatives to grow the company's business both in China and overseas.

Shares of the company, which claims to be the largest business-to-business e-trading site in China, will begin trading on Nov. 6

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