Question

Alibaba's IPO

In September 2014, Alibaba’s (BABA) IPO, which raised $25 billion, surpassed the 2010 offering from the Agricultural Bank of China (ABC), which raised $22.1 billion on the Hong Kong Stock Exchange. Read the following articles and discuss why Alibaba chose the NYSE over the Hong Kong Stock Exchange and NASDAQ.

Why Jack Ma May Choose New York for Alibaba IPO?

Alibaba Picks New York Stock Exchange for IPO.

Alibaba Claims Title For Largest Global IPO Ever With Extra Share Sales.

Answer 1

The reason why Jack Ma chose NYSE for Alibaba’s IPO was due to a couple of reasons. First of all Jack Ma wanted to list in USA in order to maintain control of the company. The pre-IPO ownership structure of the company was such that Ma would have kept the control of the company despite the fact that he did not hold significant percentage of shares after the IPO. Hong Kong does not allow control that is not based on based on majority ownership and hence Jack Ma decided to list Alibaba’s share in a stock exchange in USA.

In USA the choice was between NYSE and NASDAQ. Jack and Alibaba’s top management chose NYSE due to the fact that NASDAQ had botched up Facebook’s IPO in the past and hence the management of Alibaba was not confident that NASDAQ will be able to manage the large IPO of Alibaba. Moreover the management was of the opinion that listing in NYSE will give them higher quantum of reputation as an element of prestige is attached to NYSE.