Alibaba Files for US Public Offering

Alibaba has filed for what might become the biggest ever U.S. initial public offering.

According to the filing, the value of deals on Alibaba’s platforms was $248 billion last year. The number of annual active buyers increased by 14% to 231 million.

With Securities and Exchange Commission filing, Alibaba starts a process which will take months before it becomes a publicly traded company.

Alibaba informed in April that the fair value of its ordinary shares increased to $50. That would value the company at roughly $116 billion.

Alibaba did not specify the price or number of shares it will offer or what valuation it will seek.

Alibaba plans to use any proceeds it gets from the offering for general corporate purposes.

Investor Enthusiasm

Alibaba is entering U.S. markets amid a wave of investor enthusiasm for Chinese Internet and technology companies. In the first quarter, 8 such companies filed for $2.3 billion worth of IPOs.

Surging Valuation

Alibaba was founded by former English teacher Jack Ma, in an apartment in 1999 with a few dozen items for sale. Its valuation surged to $32 billion when Yahoo acquired its stake in 2005 and to $153 when DST Global, Temasek Holdings and Lake Management acquired its stake six years later.

Growth Risks

Alibaba’s first-quarter results were not included in the prospectus. Alibaba’s profit in the 3 months through December was $1.35 billion.

Alibaba’s businesses might be adversely affected if China’s economic growth continues to decelerate. Growing competition on Tmall and Taobao has been reducing profit margins for merchants, which might dissuade them from using the platform.

Tightening Oversight

In a move to tighten restrictions on online financial products, central bank of China stopped the issuance of virtual credit cards in March. Alibaba’s Alipay.com affiliate was planning to offer those cards.

China’s comparatively outdated financial reporting requirements, regulatory oversight, slowing economic growth and Internet infrastructure are among other factors which might potentially harm Alibaba’s business.

Growing Deals

Alibaba has been moving swiftly to boost its reach with investments as well as acquisitions in China and abroad.

Alibaba said in March that it would invest about $700 million in Intime Retail Group Co., a Beijing-based owner of supermarkets and department stores.