Alibaba Sets Record with $25 Billion IPO (Sept. 22, 2014)
Last week’s initial public offering of Chinese e-commerce giant Alibaba Group exceeded even the outsized expectations of most observers, raising $25 billion and setting a new world record for an IPO. Demand by investors during the company’s Friday New York Stock Exchange debut initially raised $21.8 billion and caused the share price to surge by 38 percent over its $68 initial pricing. The interest prompted Alibaba’s underwriters to exercise an option to sell an additional 48 million shares, pushing the total offering size to the $25 billion mark—past the previous IPO record, held by Agricultural Bank of China, which raised $22.1 billion in 2010. Shares of Alibaba ticked down slightly during trading today, selling at around $89 as of early afternoon, down from $92.70 at the start of trading.
Formed in 1999, Alibaba has since grown to dominate online commerce in China, with 24,000 employees and revenue of $7.5 billion across multiple e-commerce and payments platforms. Perhaps more importantly, the company is well-positioned to capitalize on the predicted surge in Chinese online shopping over the next few years. McKinsey & Co. projects e-commerce in China to reach $395 billion next year, tripling in size since just 2011.
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