Chinese B2B e-commerce company Alibaba.com debuted on the Hong Kong stock exchange on Tuesday and trebled to $5.09 from the offer price of $1.7. The company’s market value at the end of the day stood at $3.3 billion. It sold 858.9 million shares (17% stake) raising $1.5 billion, making it the biggest internet offering since Google’s flotation in 2004.
The company was valued at 306 times the projected 2007 earnings of $83m at the end of the market day. The revised price range of a forward price/earnings multiple for 2008 equaled to up to 55 times. To compare, Google currently trades at 46 times its earnings while auction site eBay trades at 24 times earnings. The Chinese search engine, Baidu, which had its IPO in August 2005, is at 170 times earnings.
Alibaba.com, part of the Alibaba group, which includes the auction website Taobao and e-payment system Alipay, was set up in 1999 by Jack Ma. It operates by matching Chinese suppliers with international buyers through 25 million registered users on its website. The majority earnings of the company are derived through the clients subscribing for value-added services.
Yahoo owns a 1.2% stake in Alibaba.com, in addition to a 39% stake in Alibaba group. Other investors include Cisco Systems and Taiwan’s Hon Hai Precision Industry. According to the company’s prospectus, the proceeds of the IPO will go mainly to the stake holders and partly to fund acquisitions in future.
Source: ComputerWire daily updates