Alibaba

[CityFarmer]

The world's largest capital market have other mechanisms like ERISA, S144A, Sarbanes Oxley, class action, consumer/ shareholder's rights, activist funds etc to keep it in check. Clearing houses and exchanges know integrity is paramount. If SGX and HKSE does multi-class then they also have to change the system and structure to support it.

Yes, that sound right to me. Total package counts. Thanks for the answer.

An article from Dow Jones Newswires. The key point presented consistent with Mr. Specuvestor's view.

DJ Alibaba's Spurning of Hong Kong Listing Has Downsides -- WSJ Blog
19 Mar 2014 10:27

Alibaba's choice to ditch a Hong Kong listing for a U.S. listing of up to US$15 billion will allow the ecommerce behemoth to keep control over the company's board, a privilege denied Alibaba by Hong Kong regulators. While getting into the U.S. may be easy, and a successful New York IPO is all but assured for China's biggest ecommerce player, Alibaba is unlikely is to find being listed in the U.S. easy sailing.

First, the risks of investor lawsuits loom. By listing in the U.S., Alibaba exposes itself to class-action lawsuits from investors since Hong Kong lacks a class-action mechanism. A suit filed in 2004 by U.S. shareholders against giant China Life Insurance Co. over its alleged failure to disclose sensitive information--including a government audit--alerted many Chinese companies to U.S. litigation risk, although those claims ultimately were dismissed by courts in 2008. China Life, the country's largest insurer, listed in both the U.S. and Hong Kong in 2003.

Second, Alibaba's listing implies the need to turn over books containing valuable data on the Chinese economy to U.S. regulators. That might make Chinese officials uneasy.

"There's a lot of what China might consider to be state secrets inside of Alibaba," said Paul Gillis, a professor of accounting at Peking University. "Giving U.S. regulators access to that information is something that I think China doesn't really relish."

Third, Alibaba faces uncertainty from an ongoing battle between the Securities and Exchange Commission and PRC affiliates of the Big Four accounting firms. The SEC has demanded access to working papers from the Big Four affiliates, which they say they cannot provide without violating Chinese law. In January, an SEC administrative judge suspended the PRC affiliates from auditing U.S-traded clients for six months, a decision the firms have appealed. Alibaba is insulated from the immediate suit; it says its principal auditor is PricewaterhouseCoopers Hong Kong, which is unaffected by the ruling. But sources previously have told Moneybeat that issues surrounding Chinese secrecy laws might also apply in some cases to Hong Kong auditors, leaving them vulnerable to SEC sanction in the future.

And lastly, while a favorite venue of Chinese tech firms, the U.S. remains an unfamiliar market. Hong Kong has a larger investor base that understands--and is willing to invest in--Chinese companies. Alibaba Executive Vice Chairman Joe Tsai has written on Alibaba's corporate blog that since most of Alibaba's business is in China, "it was natural for Hong Kong to be our first choice." In an emailed statement, the Hong Kong Exchange echoed that sentiment, noting that HKEx has been "the leading offshore capital formation centre for companies from Mainland China" for the past 20 years.

In fact, Alibaba rival, Tencent Holdings Ltd., is up roughly 10% since the beginning of 2014 in Hong Kong and has surged nearly 700% since it raised around US$200 million in its 2004 IPO. It now has a market capitalization of roughly US$140 billion. Meanwhile, Baidu, Inc., China's leading search engine and another internet rival of Alibaba's, is down 9% year to date. It hasn't done badly however, a reflection of the huge investor base in the U.S. covering fast-growing Chinese tech companies: Since its roughly US$4 billion IPO, Baidu is now worth US$56.63 billion.

Ironically, Alibaba may be exempt from the burden most companies associate with a U.S. listing--onerous requirements on disclosures and transparency. Foreign issuers are exempt from some of the stricter reporting requirements under the U.S.'s landmark Sarbanes-Oxley Act. Hong Kong, meanwhile, has more burdensome barriers for entry for companies using variable interest entity structures, or VIEs, which allow Chinese companies in industries where foreign ownership is restricted-web companies, for example-to list on overseas exchanges, according to Antony Dapiran, a partner at Davis Polk. Under VIE structures, the offshore listed company owns a Chinese shell company which contracts with the underlying Chinese firm to receive all its profits. Because the arrangement relies on contracts, if a company fails, foreign investors don't have much access to the underlying company's assets in China. Compared to Hong Kong, U.S. VIE regulation is light.

"In a way the U.S. is less burdensome than Hong Kong for a company like Alibaba," said Mr. Dapiran. The VIE structure already worked to Alibaba's advantage in 2012, when Alibaba founder Jack Ma transferred the contractual assets of Alipay, Alibaba's online payment system, to a private company he controlled-over the protests of Alibaba investor Yahoo.


More at The Wall Street Journal's China Real Time Report blog, http://blogs.wsj.com/chinarealtime/

Access Investor Kit for Baidu, Inc.

Visit http://www.companyspotlight.com/partner?...0567521085

(END) Dow Jones Newswires

March 18, 2014 22:27 ET (02:27 GMT)

Copyright © 2014 Dow Jones & Company, Inc.

[CityFarmer]

The M&A spree among the internet big boys continue...

Alibaba invests S$353 million in messaging app Tango

SAN FRANCISCO — Tango, the mobile messaging app-maker, announced yesterday (March 19) that it has raised US$280 million (S$353 million) in a new funding round led by Chinese e-commerce giant Alibaba.

By almost any measure, the investment amounted to a staggering sum for a mobile app developer. The deal, which came one month after Facebook’s stunning US$19 billion acquisition of WhatsApp, underscored the lengths that Internet companies are willing to go to gain a foothold in mobile communications.

Alibaba invested US$215 million while the remainder of the funding came from Tango’s prior investors, which include Access Industries, Draper Fisher Jurvetson and Mr Jerry Yang, a co-founder of Yahoo, Tango said.

The investment gives Alibaba a minority stake in a messaging service with 200 million registered users and 70 million active users. Tango claims significant traction in North America, the Middle East, Taiwan and Singapore.
...
http://www.todayonline.com/world/america...-app-tango

[specuvestor]

By Adam Haigh and Kana Nishizawa
March 24 (Bloomberg) -- In Hong Kong, where billionaire
families dominate the economy, listing standards that prevent
company insiders from hoarding control strike Pauline Dan as
protections worth guarding.
The Asian city’s stock regulator is holding firm against
looser governance arrangements that prevail in the U.S., costing
Hong Kong Exchanges & Clearing Ltd. the initial share sale of
Alibaba Group Holding Ltd. Resistance may be justified in a
market that lacks class-action lawsuits and is home to four of
Asia’s five richest people.
“There obviously will be missed opportunities, but it’s
worthwhile for us to give them up,” said Dan, who helps manage
$153 billion as Hong Kong-based head of greater China equities
at Pictet Asset Management Ltd. “I don’t think it’s necessary
for us to change this rule just to accommodate Alibaba in this
instance.”
Alibaba, China’s biggest e-commerce company, said March 16
it will begin the process of filing for an initial public
offering in the U.S., after struggling to persuade Hong Kong’s
regulator that it should be allowed to let its partners nominate
a majority of directors. Bourse head Charles Li said in a
statement last week that the city needs to work out how to
accommodate firms tied to “new economy.” Alibaba respects the
viewpoint and policies of Hong Kong, the company said in a
statement on March 16.

Swire Pacific

Only one Hong Kong-listed company has more than one class
of stock: Swire Pacific Ltd., which operates businesses from
real estate to aviation and issued B shares in 1973. The
regulator barred the practice in 1987 after companies including
Jardine Matheson Holdings Ltd., Cheung Kong Holdings Ltd. and
Hutchison Whampoa Ltd. proposed issuing B shares in exchange for
one or more of its ordinary equities, allowing controlling
shareholders to increase voting power, according to David Webb,
a former exchange director who founded local governance watchdog
Webb-site.com.
NYSE took the opposite approach in the same decade, giving
in to pressure after General Motors Co. threatened to move its
listing to an alternative venue to allow it to issue stock with
fewer voting rights. The New York bourse reconsidered a policy
of rejecting dual-class structures, spurring almost 50 companies
to sell stock with different voting rights from GM in 1984 to
the middle of 1987, according to the St John’s Law Review.
Alibaba’s board-nomination proposal to Hong Kong would have
enabled its founder Jack Ma and his management team to maintain
control. Executive Vice Chairman Joseph Tsai said in a September
post on the company’s website that the structure didn’t involve
more than one type of stock and therefore didn’t breach the
“one-share-one-vote” principle.

Investor Inertia

For Jeffrey Mak, a partner in Hong Kong at law-firm DLA
Piper, there is too much risk for Hong Kong regulators to change
the status quo because without a class-action legal system,
shareholders seeking redress are out of luck.
“The whole U.S. system is more litigious, meaning that if
there’s anything wrong, then investors tend to go to lawyers to
sue,” Mak said by phone. “In Hong Kong, there could be an
inertia from investors to sue a company in such situations. The
regulators want therefore to take a more proactive role in Hong
Kong to protect the interest of shareholders.”
In Hong Kong, people have to pay upfront for their own
lawsuits and the city lacks a class-action mechanism, Mak said.
Of its 1,669 listed companies, 486 are domiciled in China, which
has its own legal system.
Martin Wheatley, chief executive officer of the U.K.’s
Financial Conduct Authority, said regulators should avoid knee-
jerk changes.

Core Principles

“At your peril do you mess around with a set of rules at
very short notice because of one or two individual instances,”
Wheatley said in a Bloomberg TV interview in Hong Kong on March
20, while adding he was not commenting specifically on Alibaba.
“My approach in the U.K., and I’m sure the approach here, is
that you have to think very hard before you move away from some
core principles.”
In the U.S., companies including Google Inc. and Facebook
Inc. have more than one type of share, as does Canada’s Canadian
Tire Company Corp. In the U.K., Royal Dutch Shell Plc has two
share classes that are identical for rights while the tax paid
on dividends differs. Singapore doesn’t allow dual-class voting
shares.
“Hong Kong should look to review and consider this,”
George Boubouras, who helps oversee a portfolio of global
equities worth $30 billion as chief investment officer at Equity
Trustees Ltd. in Melbourne, said by phone. “Shareholders are
becoming more interactive on proposals to changes on
remuneration and inputs into the laws, so if they want to be
heard there are ways of doing it.”

Alibaba Valuation

Alibaba said March 16 it would start the process for an IPO
in the U.S., without specifying how many shares it would sell or
at what price. It may sell about a 12 percent stake in itself,
according to a person with knowledge of the matter, making it an
$18.4 billion offering based on the $153 billion average
valuation of analysts, according to data compiled by Bloomberg.
Alibaba would join Chinese Internet firms already listed
and those looking to go public in America. Baidu Inc., owner of
China’s biggest Internet search engine, sold shares in the U.S.
in 2005 on Nasdaq OMX Group Inc. JD.com Inc., the Chinese
retailing website that received an investment from Asia’s
largest Internet company Tencent Holdings Ltd., has filed to
raise $1.5 billion in the U.S.

IPO Sizes

The Hong Kong bourse hasn’t hosted an initial share sale of
more than $4 billion since October 2010. The Hang Seng China
Enterprises Index, the world’s second worst-performing benchmark
stock measure this year, rose 1.7 percent as of 10:38 a.m. in
Hong Kong to pare its 2014 drop to 11 percent.
Hutchison Whampoa Ltd., controlled by Asia’s richest man Li
Ka-shing, said March 21 it had agreed to sell a 25 percent stake
in its retail arm to Temasek Holdings Pte for HK$44 billion
($5.7 billion). Li said the companies will seek to list A.S.
Watson & Co. in two to three years, changing a plan for an IPO
this year. Hutchison fell as much as 6 percent today, set for
the biggest drop since October 2011.
Hong Kong Exchanges CEO Charles Li, 52, is positioning Hong
Kong as the investment link between China and the rest of the
world, buying the London Metal Exchange for $2.2 billion in 2012
to expand the bourse’s operations into commodities.

Responsive, Competitive

“We are proud of our tradition of respect for the rule of
law and adherence to principles,” Li said in a statement.
“However, we also need to find ways to make our market more
responsive and competitive, particularly with respect to new
economy or technology companies.”
Hong Kong’s Securities and Futures Commission Chairman
Carlson Tong said the regulator does not object to the Hong Kong
bourse consulting the market on new rules, while signaling the
threshold for adopting a different stance is high.
“The principal of ‘one share one vote’ is deep-rooted in
the Hong Kong capital market,” Tong said in an e-mailed
statement on March 20. “Many questions need to be answered
before we can consider changing.”

[CityFarmer]

Online cum offline shopping seems synergizing well enough for Alibaba to make the move...

Alibaba adds S$870 million deal to shopping cart

HONG KONG — China’s Internet behemoths continued their shopping spree yesterday, with Alibaba Group announcing it would pay HK$5.37 billion (S$873 million) for a stake in a Chinese department store operator.

The investment will give Alibaba a stake of 35 per cent in Intime Retail Group and help China’s biggest e-commerce operator integrate online and offline shopping.

Alibaba and its closest Chinese rival, Tencent Holdings, have carried out a flurry of deals in recent months as each seeks to shore up their market positions and expand into new business lines.

By buying a stake in a brick-and-mortar retailer, Alibaba said it was seeking to leverage its huge base of online shoppers and its technological know-how to increase sales at Intime, which operates 36 department stores and shopping centres across China.
...
http://www.todayonline.com/tech/alibaba-...pping-cart

[opmi]

Alibaba is paying cash for all its purchases. Borrow first, then get $$$ from IPO?

Cannot imagine Jack Ma shopping spree with Alibaba shares after listing. maybe the 2 tier system is
to safeguard his stake while he plays with his Monopoly money.

[CityFarmer]

Alibaba is paying cash for all its purchases. Borrow first, then get $$$ from IPO?

Cannot imagine Jack Ma shopping spree with Alibaba shares after listing. maybe the 2 tier system is
to safeguard his stake while he plays with his Monopoly money.

When you buy-in with the IPO, you are actually invest on Jack Ma's and his team's vision, rather on Alibaba asset and earning power, IMO

[Nick]

I believe GIC has a stake in InTime Retail.

http://www.reuters.com/article/2011/11/1...1320111116

[opmi]

Is Jack Ma doing a "AOL-Time Warner" or "PCCW-HKT" ??? Changing overpriced Monopoly money with real assets?

[CityFarmer]

The impact of Alibaba on China financial sector will continue and increasing...

Alibaba's Jack Ma invests US$532 mln in financial software firm
03 Apr 2014 12:46
[BEIJING] Jack Ma, the founder of China's Alibaba Group Holding Ltd, the world's biggest e-commerce firm, will pay 3.3 billion yuan (US$531.78 million) to take a controlling share of financial software firm, Hundsun Technologies Inc.

Hundsun Technologies said on Thursday that Hundsun Group, which owns a 20.6 per cent stake in Hundsun Technologies, will sell 100 per cent of its shares to Zhejiang Finance Credit Network Technology Co, a company 99 per cent owned by Ma.

That will give Ma a controlling share of Hundsun Technologies, the company said in a statement to the Shanghai Stock Exchange.

Ma's move underscores his desire to move into and reshape China's financial services sector, an area that Alibaba's Joe Tsai, the man steering the company's highly anticipated U.S. listing, described as "antiquated".
...
Source: Business Times Breaking News

[CityFarmer]

I create a new thread for Alibaba, after its filing of IPO...

Alibaba files US IPO, may raise S$25b to dwarf Facebook’s offering

NEW YORK — Chinese e-commerce behemoth Alibaba Group has filed paperwork in the United States to sell stock to the public for the first time, in an embrace of the global capital markets that represents a coming-of-age for China’s booming Internet industry.

“Alibaba is the fastest-growing Internet company in one of the fastest-growing economies in the world,” said Mr Sameet Sinha, an analyst with B Riley & Co, a boutique investment bank in Los Angeles. “They are like an Amazon, an eBay and a PayPal.”

In the filing on Tuesday, Alibaba said it intended to raise US$1 billion (S$1.25 billion) in an initial public offering — a figure used to calculate its registration fee. However, the company is expected to ultimately raise US$15 billion to US$20 billion (S$25 billion), which would make it the biggest American IPO since social networking site Facebook’s US$16 billion offering in May 2012.

When it makes its debut on the New York Stock Exchange or the NASDAQ market, Alibaba is also expected to have a share price that could value the company at about US$200 billion — more than the market value of Facebook, Amazon.com or eBay, though still trailing that of Google or Apple.

Wall Street has been eagerly awaiting the Alibaba IPO, seeing it as perhaps the best chance yet to buy into China’s growth.
...
http://www.todayonline.com/business/alib...s-offering