Alibaba Reconsidering Hong Kong IPO
Asia's Most Powerful Internet Firm
In a surprising reversal, China-based e-commerce firm Alibaba Group may now hold its initial public offering in Hong Kong, instead of New York. The potential switch follows word that trading regulators in Hong Kong might change their governance rules, allowing Alibaba partners to appoint board members. Alibaba, led by Counselor Power 50 member Jack Ma, has reportedly made internal – rather than pubic control – of his firm a priority throughout IPO-related negotiations. In essence, Ma wants to guide key boardroom decisions at Alibaba without pressure from non-affiliated investors.
Hong Kong Exchange CEO Charles Li said last week that he is open to alternative governance structures – something the NYSE and NASDAQ use to attract top tech companies. "The vision and ideas of these founders are core assets of these companies," Li wrote in a blog post. "Protecting the founders and allowing them to deliver on their vision is usually in line with shareholders' interests."
Previously, Li had defended the exchange's stance, writing "we should take responsibility for doing what is right and best for Hong Kong, not just what is safe and easy." Last Friday, Alibaba CEO Jonathan Lu admitted his firm was slowing down its preparations to go public, an indication that the Hong Kong Exchange had won more time to amend its conditions.
Ma founded Alibaba in 1999 and has built the company into Asia's most powerful Internet firm. The company operates websites where merchants can sell items – including promotional products – directly to consumers worldwide. Alibaba's Q2 revenues were $1.73 billion, a year-over-year gain of 60%. With its second-quarter results, investors now expect Alibaba to be valued at up to $120 billion – rivaling Facebook's 2012 IPO – when the firm goes public.