Chinese E-Commerce Company Lands Largest IPO Ever
Sept. 22, 2014
A Chinese e-commerce company, which many have characterized as the Amazon of China, on Friday raised $21.8 billion at its U.S. initial public offering, putting it ahead of previous top IPO dog Visa ($18 billion). Shares of Alibaba initially were priced at $68, but ended the day at nearly $94 per share.
Alipay, the company’s payments arm that was spun off in 2011 but remains financially affiliated with the parent company, could increase the value of the company as a whole, but by how much is unclear. After the spinoff, major investors were furious and the companies struck a deal that, if Alipay is ever sold, Alibaba will receive a one-time payment equal to 37.5 percent of the value of the deal. Alipay is the most popular payment method for e-commerce merchants in China. And, as of 2013, China is the largest e-commerce market in the world at $297 billion in sales to the U.S.’s $263 billion.