Alibaba looks to unlock new markets
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Alibaba’s record-setting stock offering due this week gives the Chinese online group a huge war chest that can help its global expansion.
Yet it remains to be seen whether the initial public offering (IPO) will propel Alibaba into challenger for the dominant technology firms like Amazon, Google and eBay, analysts say.
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Alibaba this week boosted the price range for what was already expected to be the biggest stock offering on record, and will raise as much as $US25.03 billion ($A27.08 billion).
Alibaba would have a market value of $US163-$US168 billion based on the new price range.
A final offering price was expected on Thursday, which would allow the stock to trade on Friday, said sources familiar with the deal.
The IPO allows investors to get a piece of the huge Chinese market, but it also will fuel Alibaba’s expansion plans.
Warwick Business School professor Qing Wang, who researches Chinese enterprises, said the IPO could be a watershed moment.
“Alibaba’s IPO could well be the end of US dominance in the world technology sector,” Wang said.
“Alibaba’s annual growth rate of more than 30 per cent shows that the gap between the Chinese companies, Alibaba and Tencent, and US companies is getting ever closer.”
Wang said that among the global internet firms, the biggest in terms of size are now Google, Alibaba, Tencent and Amazon.
The Britain-based academic said Chinese firms like Alibaba needed to be “highly entrepreneurial and market-oriented” and that this will serve them globally.
The research firm PrivCo said Alibaba, set to launch at $US66 to $US68 a share, is probably worth a lot more – as much as $US100 a share or $US240 billion – because of its “substantial and largely underreported string of private company stake purchases and acquisitions, which the data shows have only been growing in size and pace in recent years.”
Other analysts were sceptical.
“Despite its dominance in China, Alibaba won’t be sweeping away US market share in the near future,” a Forrester Research report said this week.
“Rather, it will take a major acquisition or a number of years for Alibaba to pull together a platform that could compete with major players like Amazon, Apple, eBay, and Facebook.”