Alibaba IPO prices at top of range, raising $21.8b

(Agencies) Updated: 2014-09-19 07:35

"Beating the rush doesn't count in this game," Boland said.

Alibaba's revenue surged 46 percent in the April to June quarter on strong gains in its mobile business, with net income attributable to its shareholders nearly tripling to $1.99 billion, or 84 cents a share.

Ma, who founded the company in a one-bedroom apartment, will have a paper fortune worth some $14 billion, vaulting him into the ranks of tech billionaires like Bill Gates and Jeff Bezos. The deal is also expected to make millionaires out of a substantial chunk of the company's managers, software engineers and other staff.

In addition, it allows cornerstone Alibaba investors like Japan's Softbank and Yahoo to profit from their foresight in getting in on the ground floor at the e-commerce giant. Yahoo is selling some $8 billion worth of shares in the offering, leaving it with a 16.3 percent stake. Softbank is not selling for now and will be left with a 32 percent stake, making it the largest single shareholder.

The successful IPO sets the stage for Alibaba shares to make their debut on the New York Stock Exchange on Friday, with many investors and analysts betting that there is still room for a substantial first-day jump in the shares.

One investor said that the IPO's underwriters, who include Credit Suisse Group AG, Citigroup Inc and Goldman Sachs Group Inc, were hoping for a first day "pop" of 10 to 15 percent. That's about in line with the norm for IPO debuts, whose underwriters typically seek an increase large enough to signal healthy demand but not so much so that it looks like the company and its investors "left money on the table."

Other big Chinese Internet stocks have performed well in US markets, including Baidu Inc, whose shares rocketed 354 percent on their first trading day in 2005.

Underwriters on the Alibaba deal also include Morgan Stanley gan Chase & Co, with Rothschild, which does not have underwriting operations, advising Alibaba on the deal.

Still, concerns that an opaque corporate governance structure and Ma's outside investments will stymie minority investors' rights could limit the upside around the deal.

"Rarely in history has there been an IPO of this size for a company that we know less about," Senator Bob Casey, Democrat of Pennsylvania, said in a statement on Wednesday. "I continue to be concerned that about the level of transparency from Chinese firms listing in our markets."

Alibaba is selling 320 million shares, equivalent to about 13 percent of the company's capital. Nearly two thirds of those shares are being sold by existing shareholders including Ma, who will reap $867 million.