U.S. Tech IPOs Continue to Sizzle with Alibaba Choosing U.S. Stock Exchange
March 31, 2014
By Marc Fogarty CPA, CFE
The Alibaba Group, an internet marketing and technology company operating primarily in the People’s Republic of China, is choosing to become a public company on a U.S. stock market exchange, and choosing not to be listed in the Hong Kong exchange (at least for the time being). The company said that the move to the U.S. is to “…make us a more global company and enhance the company's transparency, as well as allow the company to continue to pursue our long-term vision and ideals.” This is thought-provoking since there has been a debate about the rules and regulations being comparatively stringent in the U.S. In the past, there have been many companies choosing to go overseas. Perhaps this 'reverse decision' is an indication that international opinion is moving toward the support of U.S. GAAP as the superior set of accounting standards.
The biggest headline surrounding the Alibaba IPO is that the valuation is expected to be around $130B, which is one of the highest valuations for any IPO, if not the highest ever. It is also noteworthy that six major banks are expected to be involved, which clearly shows that while the banks are excited about the potential of this IPO, there is an agreed upon acceptance of the need to diversify and make sure no single bank is left with the majority of the risk. Estimated fees for the public offering could reach $150M, which certainly will keep a lot of bankers, lawyers and accountants gainfully employed.
Whether or not the Alibaba IPO comes to fruition, it's a clear indication that U.S. tech IPOS are continuing to gain attention and high valuations. We'll keep you posted!