An IPO trading of Ali Baba must be a record in terms of funds raised and strengthen China’s position as a world economic leader
In early August, finally became known date of initial public offering of shares , which may be the greatest of all time trading on the stock exchange in the world. The Chinese company, Ali Baba, which is engaged in retail sales on the Internet, said it was ready to start selling its securities on New-York Stock Exchange just after Labor Day, which is celebrated in the United States on 1 September.
Investment banks are already lined up for the role of the company, which will serve this accommodation. This is not surprising, since according to preliminary data from the commission of occupancy estimated to be billions of dollars. Internet itself trader expects to raise through the sale of shares is not less than $ 20 mlrd.i increase its market value to at least $ 150 billion. Experts suggest that it is quite possible, as it is now the position of the Chinese company is stronger than ever, because it has the largest online audience (more than 600 million. persons) in the fast-growing economy in the world.
At the same time, a few months ago, bankers assumed that the amount that will attract Ali Baba, will be at least twice as high. But long negotiations with regulatory authorities and the United States fear that the Chinese company will repeat the fate of Facebook, did the trick.
Nevertheless, it will be the first big IPO Chinese company that is not engaged in heavy industry or mining resources. “China has formed an internal market and will now use it as the basis for profit,” – says Delo.UA Carlos Kirzhner of Sanford C. Bernstein & Co. According to him, along with the regular purchases of assets of foreign companies, China is ready to strengthen its position in the world economy. At the same time the Western countries, which solves its own problems especially not resist it.
By 2015, according to the World Bank , China will become the world’s largest economies, as well as the country with the huge domestic market, which according to its terms of consumption will overtake the United States and the EU. Because now foreign investors are trying to get a place in this market. And then they did not spare the money.
Ali Baba company was incorporated in 1999, a small entrepreneur Jack Ma and 17 of his companions. Then it was a site where small firms could be traded on the exchange of services. After a few years the company has been able to register their shares on the Hong Kong Stock Exchange.
What’s interesting is the rapid development of Ali Baba coincided with rising tensions between China and Western Internet companies, who did not want to obey the conditions of operation of the network in the PRC. So in 2010, US-based Amazon launched legal proceedings concerning China’s intervention in the work of its networks. As a result, the company recognized that the work in this country is difficult, but did not dare to face up to such a vast market and now wants to invest $ 400 million. Already in the development of Chinese trade platform.
Especially the activities of American companies in China are often dependent on the political situation. So in 2010, when relations between Beijing and Washington regarding the Pacific free trade zone at an impasse, and the Nobel Peace Prize, Liu Xiaobo, the Chinese dissident, in China for some time closed the access to all the non-Chinese sites. At Ali Baba with this was no problem, as in Western countries is not taken to block the internet due to political differences. And because the company is rapidly gaining momentum.
Especially because it has appeared more and more customers, since China is rapidly formed a middle class. This process should be completed by 2020, while the UN predicts that the average family income in this country will not be less than that of the same family in Europe or the United States. Of course, this is only an average, in developed countries, a much smaller income gap between rich and poor, but the trend is clear. The slowdown in the country’s development in the past few years, experts have attributed to it the growth of wages. “Right now, the GDP per capita in China, more than $ 3 million and now the Chinese are willing to spend their money,” – says Wang Ksiolu of China Reform Foundation.
Because in the absence of competitors, and given the rapid growth of the market profit vnutrennenego Ali Baba began to rise sharply. Not surprisingly, the company Yahoo in 2005 invested $ 1 billion. the company received in exchange for 40% of its shares. Now the company came to an IPO with good financial results, earning the third quarter of 2013, more than $ 800 million.’s Net profit.
In September offering will likely take place, although this date shall be postponed several times already. Apparently the owners fear that the same fate may be Facebook. In 2012, this social network has managed to attract in the placement of more than $ 17 billion., But after the first reporting the price of securities of companies start to plummet. As a result, the company lost more than a third of its value. Because now Chinese investors want to avoid such a fall and lay out on the market. “Revaluation of shares in the company may have a negative impact on its positions. And Ali Baba want to wait for the market to calm down a little,” – said Carlos Kirzhner.
But in general, American and European investors are lining up for Chinese stocks. And this is the record offering only one of the manifestations of the fact that the economic power of China to become the most important force in the world.
According to experts, if the first stage of Beijing just bought a well-known company (the trend continues, and now – in 2013 he bought several units IBM concern and Volvo), but now the country has itself takes on the world stage of their companies and thereby subjects Western countries themselves. So according to the New-York Stock Exchange in 2013, the maximum downturn in the stock markets was the United States in February, at a time when China celebrated the new year.
Already, the head of the Federal Reserve Janet Yelen said that her department will not change interest rates until the company will enter the market, so as not to scare off potential investors.
In the next 5-10 years, China will lead the world markets more companies, and each of them will become a hit because it has exclusive support of the authorities and more than a billion consumers. Because soon IPO for $ 20 billion. Could become a common occurrence. But the first of these transactions will be the Ali Baba, which should open the way for Chinese companies to big markets.