💾 Archived View for gmi.noulin.net › mobileNews › 5134.gmi captured on 2021-12-03 at 14:04:38. Gemini links have been rewritten to link to archived content
-=-=-=-=-=-=-
Jun 16th 2014, 16:01 by V.V.V. | SHANGHAI
THE world s largest e-commerce firm will soon float shares in New York in what
may well be the largest initial public offering in history. And yet, the
prospectus Alibaba offered last month to investors describing its pending IPO
did not reveal who exactly would control the firm. All punters could surmise
was that ordinary shareholders like themselves would be powerless. The firm s
proposed governance structure gives complete control in perpetuity to a secret
cabal not named in the initial offering document.
The cabal and the control remain, but the secrecy is now gone. On June 16th
Alibaba filed an amendment to its prospectus with America s Securities and
Exchange Commission that describes the 27-strong committee with the power to
name most of the members of the board of directors. Investors and pundits have
been keenly awaiting this news, given the nasty boardroom tangles seen in the
past between representatives of Alibaba s management and those of Yahoo, an
American search giant that has a big stake in the firm (which it is now
reducing).
As it turns out, most of the partners on the committee the firm fancies
itself a collegial partnership akin to Goldman Sachs or the Big Four
accountancies are insiders. Unsurprisingly, Jack Ma, the firm s flamboyant
founder and chairman (pictured), Joseph Tsai, an early co-founder and vice
chairman, and Jonathan Lu, the firm s current chief executive, sit on it. So
too do many top executives from the e-commerce firm being floated, as well as
several from Alibaba-related entities (in finance and logistics) that are not
part of the flotation.
As for the board itself, four of the directors slots will be held by top
bosses at Alibaba. Masayoshi Son, founder of Softbank, a Japanese technology
giant that invested heavily early on in Mr Ma s firm, will retain a slot; a
current director previously appointed by Yahoo is to leave, as agreed by both
parties.
The four independent directors are the real surprise. One is Michael Evans, a
former vice chairman at Goldman Sachs. Another is Jerry Yang, a co-founder of
Yahoo. Walter Kwauk, who served as head of the audit committee of Alibaba.com
(a subsidiary firm), is another. The oddest choice is Tung Chee-Hwa, the
unremarkable first leader of Hong Kong after the British handover to Chinese
control.
In addition to naming those in charge, the amended prospectus also reveals
other tantalising titbits. In the original filing, the firm had not broken out
the performance of Taobao, its gargantuan consumer-to-consumer portal, from
that of Tmall, its newish but rising business-to-consumer portal. It now
reveals that Taobao processed some $177 billion last year, while Tmall handled
about $70 billion. But the newer portal has momentum on its side: last quarter,
transaction volumes on Tmall nearly doubled, whereas they rose by only about a
third on Taobao.
In the quarter ending on March 31th Alibaba saw its operating margins fall to
45%, down from 51% the same period a year earlier. The firm s claim that this
was due to increased marketing spending aimed at getting mobile users to shop
online seems justified. During the first quarter of 2013, only about a tenth of
the sales generated on Alibaba s portals came from smartphones; last quarter,
that leapt to over a quarter.
In the end, investors are likely to be pleased by the firm s willingness to
embrace transparency (if not necessarily shareholder empowerment). However,
three questions remain unanswered. One is about demand for Alibaba shares and
their price. Analysts speculate that the flotation could raise some $20
billion, and value the firm at over $150 billion. Another is which exchange in
New York will win the coveted flotation. The Nasdaq may be the more natural
home for technology shares, but given how the exchange botched Facebook s
flotation the current betting is that the New York Stock Exchange may come out
on top.
Yet the biggest open question is when exactly the flotation will happen. The
firm refuses to give a precise date, saying only that it is likely to happen at
the end of summer. However, wags are confident it will happen on August 8th:
eight eight is pronounced ba ba in Mandarin. Investors will be hoping there
are no black sheep in sight.