Rice business expert available to discuss Alibaba IPO
HOUSTON – (Sept. 2, 2014) – News reports suggest that the long-awaited U.S. initial public offering (IPO) of Chinese-based Alibaba, the world’s largest e-commerce network, will be announced next week. It is estimated that the IPO could raise upward of $20 billion.
Zhang said Alibaba chose to seek a U.S. listing because of the weak Chinese stock market and the stronger governance required for companies operating in the U.S.
“The Chinese stock market did not do well in the past several years,” Zhang said. “It is probably one of the worst-performing stock markets in the world. This is really surprising if you look at the tremendous economic growth of China in the same time period. One of the reasons for this weakness is the lack of governance and lax monitoring of companies on the Chinese stock exchange.”
Zhang further commented that Alibaba’s valuation might be discounted in the long run in the U.S. capital market for two major reasons: “First, Alibaba’s business is too big and too complex, partially due to recent acquisitions. It would be hard for analysts and investors to understand its businesses and find an appropriate comparison group. Second, its ‘partnership’ ownership structure keeps control within inside managers. External investors would have limited influence on its businesses or governance. For these reasons, it might be wise to have a relatively low offer price to attract U.S. investors. A large price increase in the aftermarket, if it occurs, will attract investors to subsequent offerings.”
To schedule an interview with Zhang, contact David Ruth, director of national media relations at Rice, at email@example.com or 713-348-6327.
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