As you may have seen, Alibaba this week filed documents with US authorities that set in motion the process towards IPO, at one of the New York exchanges, in the coming months.
Which means we must start with some mandatory statements regarding the company and the IPO. Let’s get them out of the way.
Tech’s biggest IPO (probably)
First of all, of course, we must refer to the company by its full name: Chinese internet giant Alibaba.
Second, CIGA (as it will henceforth be known) has filed for what may be the largest ever tech IPO. I’m not sure what writers are basing this on since the filing documents state it will raise a paltry $1bn, but ‘analysts’ are referenced so it must be true.
Nonetheless, the important fact to convey is that this will beat Facebook’s $16bn IPO (maybe).
Third, CIGA was founded by a schoolteacher. Jack Ma is his name and he taught English. So there you go.
Finally, we must acknowledge that CIGA is bigger than eBay and Amazon combined. They handle $250 billion of transactions, although no-one seems to care over what time period nor exactly how close that is to a hypothetical eBayazon.
Presumably with 230 million active users it is also a large pseudo-country, but those comparisons only apply to Facebook and/or California apparently.
Master of all trades
What do they do exactly, apart from being gigantic and on the internet?
Well it is hard to argue that Tao Bao is similar to eBay, including PayPal equivalent Alipay, and they do have Amazon-like B2C businesses, but their core operation is B2B: an internet-based wholesale marketplace, linking suppliers and distributors or bulk buyers.
In addition, as Quartz wryly pointed out yesterday, they are also the Dropbox, Uber, Hulu and ING Direct of China.
Money changing hands…
Alibaba has two large shareholders of note in Yahoo! (23%) and Softbank (34%), a large Japanese telecom firm.
The IPO will be another feather in the cap for Marissa Mayer, whose shareholders have been calling for a liquidation of Yahoo!’s investments for several years.
With hints that the proceeds could be spent on further acquisitions, large Western internet properties might want to dust off their accounts in anticipation.
It keeps the cycle of liquidity and investment moving and can only be a good thing for growing private tech companies.
…from all directions
What is interesting is that Alibaba itself has been writing cheques for a while now, especially in the US.
It has made investments in Shoprunner, Lyft, Tango and 1stDibs, at least two of which were over $200 million investments.
IPO proceeds could find their way back to Silicon Valley via this VC arm as well.
Home is where the heart is
That aside, what next for Alibaba?
Some ‘analysts’ appear to think they might have a go at the US at some point, but this one thinks that is a touch Americentric.
Just Eat, another recent IPOer, have been fairly open about their decision to eschew the US market. For all its size and apparent homogeneity, it can be surprisingly fragmented and idiosyncratic, and outsiders are often well-advised to leave temptation alone.
Tesco and Liam Gallagher would vouch for that.
With a mere 230 million active users but more than 75% of Chinese e-commerce traffic, along with that huge portfolio of internet services, I fancy they will continue to focus on increasing their penetration at home.
They can really capitalise on that e-commerce runway with their number one position, as well as leveraging their brand into all these other areas.
By comparison going toe-to-toe with Amazon/eBay/PayPal/Dropbox/Netflix doesn’t sound like it will end well for anybody.
Image Credit: Wikimedia