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from Breakingviews:

Alibaba’s small IPO hike leaves room for believers

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Pricing initial public offerings is an inexact science. Predicting how investors will value a large, fast-growing Chinese e-commerce group involves even more guesswork. That makes Alibaba’s decision to lift the maximum price for its upcoming stock market debut by just $2 a share to $68 puzzling.

It’s not unusual for companies listing in the United States to tweak their IPO price range before finalising the offering. What’s surprising is that Alibaba made such a small adjustment when confronted with what people involved in the process describe as “overwhelming” demand from investors. The new ceiling is only 3 percent above the previous maximum. Compare that with Twitter, which priced its shares 30 percent above the top of the original price range, or Facebook, which lifted its price by 9 percent and also sold an extra chunk of stock. Even JD.com, Alibaba’s Chinese rival, priced its IPO 6 percent above initial indications.

The new maximum market capitalisation of $168 billion – $169 billion if underwriters exercise an option to sell some more shares – does not look a stretch. A Breakingviews calculator puts the company’s value at $158 billion. But the higher target would be justified if Alibaba’s e-commerce volumes grow by 35 percent a year for the next two years, rather than 30 percent, or if Alibaba’s operating margin remains at its current level of 43 percent, rather than declining to 40 percent.

from Breakingviews:

RBS puts lipstick on Citizens for $14 bln IPO

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Royal Bank of Scotland is applying a fair amount of lipstick to its U.S. unit ahead of a planned initial public offering. Citizens Financial is worth up to $14 billion, based on the price range of $23 to $25 a share set on Sept. 8. Like the leaders of its home nation, RBS is painting too pretty a picture of life after independence.

from Breakingviews:

E-book: Alibaba and the twelve digits

By Breakingviews columnists

The authors are Breakingviews columnists. The opinions expressed are their own.

 

China’s e-commerce colossus is hitting the road for a $100-billion-plus IPO. But a spectacular growth story comes with quirks, including bizarre governance and founder Jack Ma’s penchant for offbeat deals. Breakingviews offers a punchy primer on the risks and rewards.

Read the e-book online (English)

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Download the PDF (Chinese)

from Breakingviews:

Six steps to Alibaba’s twelve-figure valuation

By Peter Thal Larsen 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

How do you value a tech company? What about a dominant, fast-growing, profitable tech company with no peers that operates in an opaque economy? Fund managers need to decide as Alibaba kicks off the roadshow for its long-awaited initial public offering. Breakingviews offers a six-step guide to sizing up China’s biggest e-commerce group.

from Breakingviews:

Alibaba deal spree turns from romance to thriller

By John Foley 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Alibaba’s investment story has turned from romance to thriller. Its Hong Kong movie-making affiliate has uncovered “possibly non-compliant” accounting just four months after the Chinese e-commerce giant bought a 60 percent stake. It’s not clear whether Alibaba’s controls were flawed – but it certainly raises questions about the value of the company’s recent investment binge.

from Breakingviews:

IPO exuberance ensnares Deutsche, Wells Fargo

By Robert Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

IPO exuberance has ensnared Deutsche Bank and Wells Fargo. The two banks nixed a biotech deal last week - six days after it started trading. Their reasoning looks defensible, but their due diligence beforehand less so.

from Breakingviews:

Alibaba payments cleanup makes for neater IPO

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Alibaba just can’t stop tinkering with its corporate structure. Weeks before the Chinese e-commerce juggernaut is due to start a roadshow for an initial public offering, it has tidied up relations with its payments affiliate. Though the new arrangement is still messier than shareholders might want, it should make for a neater IPO.

from Breakingviews:

China’s e-commerce secret weapon: the delivery guy

By John Foley 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Want a Big Mac delivered to your door in minutes? Or a refrigerator by the end of the day? While U.S. retailers puzzle over how to make that happen, China’s e-commerce companies are already there. Servicing the country’s web-connected consumers at ever-faster speeds is driving some big businesses, not to mention stock market valuations. The secret weapon: the humble delivery guy.

from Breakingviews:

Line’s $13 bln valuation shows chat app exuberance

By Robyn Mak and Una Galani

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Line’s apparent $13 billion valuation sends a strong signal about chat app exuberance. The Japanese mobile messaging app’s quarterly revenue jumped 26 percent from the previous three months, its parent company reported on July 31. That pushes up valuation expectations ahead of its planned initial public offering. Yet Line’s valuation hangs on the assumption that new overseas users will spend like those back home. That seems like wishful thinking.

from Breakingviews:

The perks and pitfalls of depending on Jack Ma

By John Foley 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Buy a share in Alibaba and you place your trust in Jack Ma. The Chinese e-commerce giant’s founder, executive chairman and spiritual sultan will remain a controlling force even after the company completes its massive initial public offering later this year. The $100 billion-plus question for prospective shareholders is whether they can depend on him to always act in their best interests.

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