This case explores Alibaba’s record setting IPO. Alibaba, China’s largest e-commerce company, was founded in 1999 with a $60,000 investment from entrepreneur Jack Ma. The company has since grown to be one of the world’s largest online e-commerce companies with transactions exceeding those of Amazon and eBay combined. In 2013, Alibaba’s leaders decided it was time to take the company public. Alibaba hoped that by going public, it would raise the cash necessary to finance improvements to its infrastructure that would allow the company to continue its rapid growth. Alibaba also felt that an IPO would put it in a better position to implement an acquisition strategy. In addition, an IPO would give employees an option to sell their shares in the company. Following the decision to go public, Alibaba explored where to hold its IPO. Initially, Hong Kong looked to be a strong choice, however it was later rejected when it became clear that local regulations could effectively cause Alibaba to lose its majority vote on board appointments to other stockolders. Alibaba eventually decided to hold its IPO in the New York Stock Exchange (NYSE), the largest and most liquid exchange in the world. Alibaba’s IPO was held in 2014 and raised $25 billion for the company. What were the legal, financial, and strategic advantages to Alibaba of undertaking its IPO in New York?
This case explores Alibaba’s record setting IPO. Alibaba, China’s largest e-commerce company, was founded in 1999 with a $60,000 investment from entrepreneur Jack Ma. The company has since grown to be one of the world’s largest online e-commerce companies with transactions exceeding those of Amazon and eBay combined. In 2013, Alibaba’s leaders decided it was time to take the company public.
Alibaba hoped that by going public, it would raise the cash necessary to finance improvements to its infrastructure that would allow the company to continue its rapid growth. Alibaba also felt that an IPO would put it in a better position to implement an acquisition strategy. In addition, an IPO would give employees an option to sell their shares in the company.
Following the decision to go public, Alibaba explored where to hold its IPO. Initially, Hong Kong looked to be a strong choice, however it was later rejected when it became clear that local regulations could effectively cause Alibaba to lose its majority vote on board appointments to other stockolders. Alibaba eventually decided to hold its IPO in the New York Stock Exchange (NYSE), the largest and most liquid exchange in the world. Alibaba’s IPO was held in 2014 and raised $25 billion for the company.
What were the legal, financial, and strategic advantages to Alibaba of undertaking its IPO in New York?
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