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Ma addresses governance issues as Alibaba begins IPO roadshow
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ALIBABA Group Holding Ltd founder Jack Ma surprised potential investors at a standing-room only event in New York by addressing governance concerns over the Chinese e-commerce giant, including a controversial 2010 spinoff of its online payment service.
Ma made the remarks at a luncheon on Monday at the Waldorf Astoria hotel in New York in front of hundreds of hedge funds, mutual funds and other institutional investors, as the company kicked off a two-week, multi-city marketing blitz for its initial public offering.
Alibaba was expecting about 500 investors to attend the first stop on the roadshow, but some 800 showed up, forcing some into overflow rooms.
Alibaba is seeking to raise more than US$21 billion in the largest-ever US technology IPO, valuing the company at up to US$163 billion. It expects to price the IPO at US$60 to US$66 per American Depositary Share, which are scheduled to start trading on the New York Stock Exchange later this month.
Over US$200b valuation
Industry analysts had expected Alibaba to try for a valuation in excess of US$200 billion, ranking it among the 20 largest publicly traded companies in the United States. The marketing effort, which will take Alibaba on a globe-trotting tour, will help determine whether the company will price above its initial range and come closer to that valuation.
Several investors said before and after the event that they went into the presentation with a series of questions about Alibaba, ranging from concerns about its corporate governance and transparency, to plans for US acquisitions and growth. They said they did not learn anything new during the lunch but came away feeling the event was well-choreographed.
Akram Yosri, a managing partner at 3iCapital Group, said he had hoped to find out more about how the company planned to grow globally, and particularly how it plans to compete with Amazon.com Inc and eBay Inc in the US.
“Did I learn anything? Absolutely not,” he said.
But Yosri and other investors said they found Ma to be impressive, with some describing the former English teacher who founded the company in his apartment as “charismatic.” In his 10-minute remarks, Ma emphasized how the company serves small businesses in China and addressed issues of governance, investors said.
Alibaba accounts for about 80 percent of all online retail sales in China, where rising Internet usage and an expanding middle class helped the company generate gross merchandise volume of US$296 billion in the 12 months ended on June 30. Revenue in the June quarter increased 46 percent to US$2.54 billion from a year earlier, faster than the 38.7 percent growth in the previous quarter.
Governance issue
But the company has seen its share of controversy, in particular over governance and the outsized influence of its founder and senior managers. Ma holds deep sway over executive and board appointments at the company, an influence that is set to strengthen further after it goes public.
In 2010, a decision to spin off Alipay to a company Ma controlled also led to objections from major investors, including Yahoo Inc and SoftBank Corp.
Ma surprised investors at the event by talking about the move unprompted.
“Ma said it was a tough decision and time will prove it was a good one,” one investor at the luncheon said, referring to the Alipay decision. Two other investors who had flown from Toronto to attend the roadshow said they understood Ma’s comments to mean, “Trust me on this one.”
An Alibaba spokesman declined to comment.
Alibaba has been billed as one of the hottest IPOs of the year, eliciting the kind of anticipation among investors that was last seen in 2012 when Facebook Inc went public in a US$16 billion offering.
Alibaba’s draw was evident on Monday. Investors waited in long lines for elevators, making some fret about being able to make it to the venue on time and other hotel guests wondering about the commotion.
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