CHINESE e-commerce firm Alibaba.com Ltd has increased the price for its shares by more than 10 percent on heavy demand for its stocks, which may help it raise HK$11.6 billion (US$1.49 billion) from its float in Hong Kong on November 6.
The company has increased its offer price to between HK$12 and HK$13.5 per share, from the previous range of HK$10 to HK$12, for its initial public offering, a source close to the company said yesterday.
The company, together with its parent Alibaba.com Corp, plans to offer 859 million shares, of which 85 percent will be allotted through an international placement and the rest to retail investors. New shares account for 26.5 percent of the offering, while the rest will be sold by its parent. The IPO will be the largest by a Chinese Internet firm this year.
Retail subscription starts today for shares in the company, based in Hangzhou, in China's eastern Zhejiang Province, and will last until Friday. The pricing will be done on Saturday and its shares will start trading on November 6 at the Hong Kong bourse.
Heavy demand for its shares is based on a forecast that its profit may triple this year as more Chinese and overseas companies trade and source through its platforms. Sales of Alibaba.com Ltd last year were 1.36 billion yuan (US$179 million) and are expected to reach 3.13 billion yuan next year, according to Goldman Sachs, which manages its stock sale together with Morgan Stanley.
Alibaba is the biggest unit of Alibaba.com Corp, China's largest e-commerce firm, which also runs Taobao.com for online auctions, online transaction site Alipay.com, Alisoft for business software and recently Alimama.com, an online advertising platform.
It dominated 69 percent of online business-to-business trading in terms of transaction value in the second quarter, according to Analysys International, a Beijing-based IT consulting firm.
The revised offer price will help the company raise a net worth of HK$2.6 billion to HK$3 billion, which it will use for acquisitions and business development.
The company and its parent are also seeking an over-allotment option to sell an additional 113.7 million existing shares to raise a total of HK$13.1 billion, said the source close to the company, who asked not to be named.