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IPO Outlook: 
Alibaba IPO Lifts Yahoo and Softbank Fortunes
Author: Bikram Pandey
Last Update: 5:08 PM ET September 19 2014

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Alibaba Group Holdings Ltd. (BABA) soared on the first day of trading in New York after the e-commerce company based in China raised nearly $22 billion.

The online retail platform and mall operator sold 332 million shares each at $68 and raised $21.8 billion, record of any public offering after factoring the underwriters’ allocation for additional shares.

The stock surged as much as $99 at the opening and slowly traded down to $92 after nearly 246 million shares changed hands.

Jack Ma, former English teach and founder of the company launched the company fifteen years ago in his apartment in Hangzhou, China after he and co-founders struggled to raise $60,000.

After today’s public offering, the company is worth $232 billion, ahead of valuation of and eBay Inc.

The company’s successful public offering created several winners including founder Ma who is now worth $21.9 billion and still controls 7.8% of the company.

Yahoo! Inc (YHOO) invested $1 billion in the company and turned its investment to $8.3 billion after cashing in $7.6 billion two years ago after selling a stake in Alibaba and renegotiating licensing agreement.

Yahoo sold 140 million shares in the offering and will continue to retain nearly 16% stake in Alibaba worth as much as $27 billion.

Yahoo stock has surged from the low of $9 in 2008 to nearly $45 with much of the gains occurring in the last two years as Alibaba prepared to file a public offering in New York.

Another big winner in the offering is Japan based SoftBank. The telecom and Internet based company controlled by Masayoshi Son pumped $20 million in Alibaba now valued at $60 billion.

Son said he has no plan to sell its 34.1% stake before the offering and 32.4% stake in Alibaba after the offering, according to the regulatory filing with the Securities Exchange Commission.

Alibaba, the largest Chinese e-commerce platform operator, generated $8.4 billion in revenues in the year ending in March and generated $3.7 billion and generated operating margins that are comparable or near margin’s generated by Google, Facebook and Amazon.

Alibaba said in its regulatory filing that the company said it has 279 million active buyers, 50% jump from a year ago.

Alibaba operates as a broker or auction site Taobao, similar to eBay, and online mall, Tmall, where branded goods are sold through the mall. Alibaba also manages AliExpress, which helps Chinese small businesses to connect with international customers.
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