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Alibaba Seeks to Raise Billions in IPO

An employee walks behind glass door of Alibaba's company headquarters near Hangzhou, Zhejiang province. The company is expected to sell its stock to the public in an Initial Public Offering (IPO) on the New York Stock Exchange.
Alibaba Seeks to Raise Billions in IPO
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Investors in the United States are preparing for the first public sale of stock in the Chinese company Alibaba. The company sells goods by linking buyers and sellers in the huge Chinese online market. Alibaba is expected to make its initial public offering, called an IPO, in September on the New York Stock Exchange.

The total value of the company, based in Hangzhou, has been estimated at about $200 billion. Reports from Bloomberg News say Alibaba is offering investors a 12 percent share of the company. That would mean the company could raise as much as $20 billion dollars in the public stock sale.

After the IPO, Alibaba could become one of the most valuable technology companies in the world. Apple, for example, has a market value of about $600 billion. Google is valued at about $390 billion and Microsoft is worth about $370 billion.

The e-commerce company is responsible for most online sales in China. It dealt with more exchanges last year than U.S. companies Amazon and eBay combined. And it has more than 230 million active buyers.

Scott Kennedy is director of Indiana University’s Research Center for Chinese Politics & Business:

“Alibaba has grown from a very small company doing e-commerce 15 years ago or so to now being the dominant e-business company in China.”

Mr. Kennedy says Alibaba has expanded into new areas while growing its share of the e-commerce market.

“It also is involved in banking and other areas and has just been growing so dramatically that it now account for 80 percent of e-commerce in China.”

He says the company is profitable which is unusual for a technology company first offering an IPO.

Alibaba has chosen to sell its stock to the public on the New York Stock Exchange rather than in China. Scott Kennedy says that selling stock on Chinese exchanges has been difficult.

“Chinese companies have been trying to raise capital on stock markets for a long time. Within China, listing has been difficult and that market has not done very well.”

He says that the Chinese economy has grown quickly over the years, but has not supported strong stock market activity.

The California-based Internet company Yahoo owns about one fourth of Alibaba. The IPO in September could increase the value of Yahoo’s share. China is now the world’s second largest market for e-commerce with sales.

And that’s the Economics Report for VOA Learning English. I’m Mario Ritter.

This story was based on reporting by VOA’s Victor Beattie. It was adapted for VOA Learning English by Mario Ritter and edited by Caty Weaver.


Words in the News

stock - n. a share in ownership of a company. The stock of public companies is traded on stock exchanges.

technology – n. the use of scientific knowledge and methods to produce goods and services

market – n. a place or area where goods are sold, bought or traded; an economic system in which the prices of things are decided by how many there are and how much money people are willing to pay for them

public – adj. of or about all the people in a community or country; opposite private

economy – n. the system by which money, industry and trade are organized

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