The initial public offering of Chinese online retailer Alibaba may become the biggest in history as the company debates adding shares to what is already set to be the biggest IPO since Facebook.
A tentative plan could increase the size of the Alibaba IPO beyond the reported original target of raising $15 bn and may raise more than $22.1 bn, exceeding the record set by the IPO of the Agricultural Bank of China in 2010, according to the Wall Street Journal, citing unidentified ‘people familiar with the deal’.
The increased size would help the company further expand overseas and better compete with companies including Google, Facebook and China’s Tencent Holdings, the newspaper reports. The plan could see the company create more shares, diluting the value of stock held by existing shareholders.
‘Alibaba is at the point where, after the extreme growth it has had, it’s going to need capital to make another huge push forward,’ Paul Boyd, managing partner of ClearPath Capital Partners, an investment adviser to technology executives, told the newspaper.
Besides creating more shares, the company may also sell some more of its own stake to raise the value of the deal, the WSJ reports.
The Alibaba IPO, which is expected to be filed this week, comes amid intense activity in the global IPO market. So far this year, IPO pricings have almost doubled to 118 while cash raised has risen 51.5 percent to $48.3 bn, according to data from IPO research firm Renaissance Capital.
Asia-Pacific has raised more cash than any other region, with 34 percent of the total, just ahead of the 33.9 percent for Europe and 32.1 percent for North America. By number of deals, however, North America is ahead, with 37.8 percent, followed by Asia-Pacific with 35.3 percent and Europe with 26.1 percent.
