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Alibaba boosts possible IPO to $21.8bn amid demand

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IMAGE: Alibaba Group Holding Ltd »


ALIBABA Group Holding Limited raised the amount it’s seeking in its initial public offering to as much as $21.8 billion, coming a step closer to breaking a global fundraising record after investors showed strong interest in the shares.

China’s biggest e-commerce company is now offering the shares for $66 to $68 apiece, according to a regulatory filing Monday, compared with an initial range of $60 to $66 each. The company and its backers including Yahoo! Inc. plan to offer 320.1 million shares.

Even at the higher price, ALIBABA’s offering the shares at a price-to-earnings multiple that’s below what other publicly traded Chinese Internet peers fetch.

Founder Jack Ma told prospective investors in Hong Kong that he won’t seek too high a valuation, two people who attended the meeting said.

Alibaba’s IPO could top Agricultural Bank of China Limited’s more than $22 billion sale in 2010, as the worlds biggest. The size could increase further if Alibaba prices its shares above the range, which it can do without additional regulatory filings, or allows underwriters to sell more shares to help meet excess demand.

Alibaba is now seeking a market value of as high as $167.6 billion, or about 29 times four analysts’ estimates for earnings in the year through March 2015. Those analysts expect Alibaba’s net income to rise more than 50 percent this fiscal year from the previous twelve months.

China’s biggest search engine, trades at about 34 times estimates of this year’s earnings, while Tencent Holdings Ltd., currently the largest publicly traded Chinese Internet company, trades at 37 times. Inc. fetches closer to 133 times forecast 2014 earnings.

Chinese Internet and e-commerce companies that trade in Hong Kong and New York currently fetch a median of 43 times estimated earnings, data compiled by Bloomberg show.

Article Credit: Businessdayonline

Updated 3 Years ago

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Tags:     ALIBABA Group Holding Limited     Jack Ma Inc.     Hong Kong