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Alibaba Lands Stunning IPO

China's continuing economic growth is showing no signs of stopping, with the second largest Internet-related stock issue of the last few years taking place over the last couple of weeks. Chinese Internet powerhouse, Alibaba, raised more than $1.5 billion USD in its initial offering, with a closing price on day 1 valuing the company at more than $25 billion USD (which pales in comparison to PetroChina, which instantly became a trillion dollar company upon floatation).

Unlike many of the current flavour-of-the-moment sites in the West, Alibaba's main focus is on providing business-to-business (B2B) services to help Chinese businesses find and do business with each other. The company is definitely on to something big, as it was responsible for more than 40% of all online transactions in China over the period April - June this year. What could be more interesting is if the Alibaba group decides to float their eBay-equivalent, - an auction site targeting the Chinese market.

While Alibaba has enjoyed a successful entry into the market, the underwriters have the ability to release more shares - something that might be a formality, considering that the initial subscription in Hong Kong alone was more than 250 times oversubscribed.

There may be concerns about a heated investment market in the USA, but China's main index has doubled in the first eight months of this year, and has added a further 12% since August.

8 November 2007

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