Chinese e-commerce giant Alibaba made its debut as a publicly traded company on the New York Stock Exchange Friday, opening at $92.70 a share, for an impressive valuation of $228.5 billion.
CEO and founder Jack Ma stood on the NYSE trading floor as eight Alibaba customers, including an American cherry farmer and a Chinese Olympian, rang the opening bell signaling the start of transactions.
On Thursday, Alibaba Group Holding priced its initial public offering (IPO) at $68 a share, the top end of the expected range, raising $21.8 billion.
Based on the earlier share price, Alibaba was valued at $167.6 billion, surpassing American corporate giants from Walt Disney to Boeing. The offering vaulted it atop U.S. e-commerce rivals like Amazon and eBay and gave it more financial firepower to expand into the United States and other markets.
“I’d put them [Alibaba] in a class of Facebook and Google with the scale they have, growth prospects and profitability,” Scot Wingo, CEO of e-commerce software provider ChannelAdvisor, told Reuters.
A poll conducted for Thomson Reuters by market research company Ipsos found that 88 percent of Americans had never heard of the Chinese e-commerce company, which is responsible for 80 percent of online sales in the world’s second-largest economy.
But that didn’t sap enthusiasm among multiple large U.S. institutions, including Blackrock, which put in orders for allocations of at least $1 billion in shares, according to sources.
Investors briefed on the matter said 35 to 40 institutions each placed orders for shares worth $1 billion or more.
On the basis of the amount raised so far, Alibaba’s IPO is the third largest ever, behind Agricultural Bank of China’s record $22.1 billion listing in 2010 and Industrial and Commercial Bank of China’s $22 billion flotation in 2006.
Ma, who launched the company in a one-bedroom apartment 15 years ago, will have a paper fortune worth some $14 billion, catapulting him into the ranks of tech billionaires like Bill Gates and Jeff Bezos. Ma will retain a nearly 8 percent stake, worth $13.1 billion at the $68 a share price that Alibaba announced Thursday.
In addition, the IPO allows cornerstone Alibaba investors like Yahoo to profit from their foresight in getting in on the ground floor with the e-commerce giant. Yahoo is selling some $8 billion worth of shares in the offering, leaving it with a 16.3 percent stake.
Still, concerns that an opaque corporate governance structure and Ma’s outside investments will stymie minority investors’ rights could limit the upside around the deal.
“Rarely in history has there been an IPO of this size for a company that we know less about,” Sen. Bob Casey, D-Pa., said in a statement on Wednesday. “I continue to be concerned that about the level of transparency from Chinese firms listing in our markets.”
Charismatic by the gray standards of Chinese CEOs, the elfin Ma is nicknamed “Crazy Jack” and is seen as China’s version of Steve Jobs, Jeff Bezos or Bill Gates. Ma used his entrepreneurial wits to build up an e-commerce giant in stark contrast to the state owned companies that became behemoths because of Communist Party policies and ties to the political elite.
His path to Internet retailing dominance began with a business trip to the United States in 1995 that went sour after the investor he was to meet turned out to be a con man. Before he returned, he met contacts in Seattle who introduced him to the World Wide Web.
Ma partnered with a state-owned enterprise to start a Chinese version of the Yellow Pages that was Alibaba’s precursor. The venture ended with a falling out, and he later founded Alibaba in Hangzhou.
The company launched retail website Taobao in 2003 to compete with eBay in China. Ma was unfazed about going up against the U.S. giant, famously saying, “Ebay is a shark in the ocean. We are a crocodile in the Yangtze River. If we fight in the ocean, we will lose. But if we fight in the river, we will win.”
Ebay shuttered its China site in 2006, a major victory for Ma.