💾 Archived View for gmi.noulin.net › mobileNews › 5134.gmi captured on 2024-08-18 at 22:37:52. Gemini links have been rewritten to link to archived content
⬅️ Previous capture (2024-05-10)
-=-=-=-=-=-=-
2014-06-17 11:18:23
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.