Alibaba set for record IPO and international expansion

Chinese e-commerce giant Alibaba will commence its investor roadshow in the USA this week, ahead of one of the most highly anticipated IPOs in the history of the New York Stock Exchange. The initial share price is expected to be set on 18th September, with trading expected to commence on the New York Stock Exchange the next day.

Alibaba, in which Yahoo owns a 22% stake and Softbank owns 34%, will be seeking to raise up to $24.3 billion during the investor roadshow. Such a sale would value the company at approximately $163 billion, which would push the company well ahead of eBay, level with Amazon, with only Google and Facebook having a higher market value among equivalent Internet companies, for whom mobile accounts for a rapidly increasing proportion of revenue.

That said, Alibaba’s transaction volume already surpasses those of both eBay and Amazon combined, albeit largely centred on the Chinese market. A question being asked by the investor community relates to the company’s ability to acquire long-term growth on a global scale.

According to The Telegraph, Alibaba currently has more than 250 million buying subscribers, as well as 89 million selling subscribers. Contrary to Amazon, which has a global presence in more than 50 markets, the vast majority of the company’s demographic are based in China. Greater domination of the Chinese market, as well international penetration, would be a key milestone for the company if stronger competition with Amazon and eBay’s PayPal on a global scale is to be achieved.

Supposing the organisation can achieve international success outside of the Chinese market, Alibaba could provide very real competition to the likes of Amazon, with successful B2B businesses within its portfolio; including mobile payment service “Alipay”, and cloud business services arm “AliCloud”.

With the additional international revenue accrued through the IPO a big question will be how the company plans to reinvest. One potential avenue for international expansion, and certainly one which would provide a concerted competitive effort against eBay, could be further development of Alipay. The third-party transaction services business launched in 2004, and is considered by iResearch to be China’s leading payment solution provider, with services extending on to mobile platforms.

As reported by Business Cloud News last month, AliCloud opened its fifth data centre in China, in an effort to expand its reach across the Chinese technology market, but with an extra $20 billion in the bank, international acquisitions seem very much on the menu too. Incidentally, Yahoo’s market cap currently stands at around $40 billion. Just saying.