Chinese e-commerce giant Alibaba says it is gearing up to go public on a US stock exchange in what is likely to be the world's biggest initial public offering this year. Investment banks have valued Alibaba at as much as $200bn. Photo: AP

Hong Kong - Alibaba Group would begin the process of filing for an initial public offering (IPO) in the US that may be the biggest since Facebook, China’s biggest e-commerce company said at the weekend.

The announcement comes after Alibaba struggled to persuade Hong Kong regulators to approve a proposed governance structure that would allow its partners to nominate a majority of its board of directors.

A listing in China might be considered “should circumstances permit in the future”, the company said yesterday.

Investment banks have valued Alibaba, founded by former English teacher Jack Ma, at as much as $200 billion (R2.15 trillion), which would make it the biggest internet company behind Google based on market capitalisation. A US share sale by Alibaba would be a blow to Hong Kong, which has not hosted an IPO of more than $4bn since October 2010.

“Alibaba’s preference to keep its partnership structure is probably the biggest reason it chose to list in the US,” said Stephen Yang, a Hong Kong-based analyst at Sun Hung Kai Financial. “The US has more investors and analysts in the technology space.”

Alibaba has not decided when to file for the listing, how much it plans to raise, how large a stake it may sell or which exchange in the US it would seek to list on, according to a person familiar with the matter. The company did not say if it had hired banks to manage the IPO.

“This will make us a more global company and enhance the company’s transparency,” Alibaba said in its statement. “We respect the viewpoints and policies of Hong Kong.”

The prospectus for an IPO might be disclosed as soon as next month, people familiar with the matter have said. The company was also working with New York-based law firm Simpson Thacher & Bartlett, two people familiar with the matter have said.

Alibaba’s expansion since Ma started the company in his Hangzhou apartment in 1999 with two dozen items for sale mirrors China’s emergence as an economic superpower. The company had about 25 000 employees at the end of last month and generated about 70 percent of package deliveries in China in 2012.

There is still room for growth. China has 618 million internet users, greater than the population of any other country except India, and McKinsey estimates China’s internet retail market will triple to $395bn from 2011 to next year.

In January Alibaba, which operates online markets for products from Louis Vuitton bags to Boston lobsters, posted its fourth consecutive quarterly profit on surging sales.

Net income attributable to ordinary shareholders was $792 million in the three months to September last year, a 12 percent increase from the June quarter, according to a January presentation from Yahoo, which owns a 24 percent stake. Revenue rose 51 percent to $1.78bn.

Analyst valuations of Alibaba rose 28 percent after the earnings, with the company worth $153bn, according to the average of 10 estimates compiled last month. – Bloomberg