Monday - Sep 25, 2017

Alibaba shakes up the world as their IPO reaches a record figure of $25 billion

Alibaba shakes up the world as their IPO reaches a record figure of $25 billion

The NYSE knew that they would do well but no one could have imagined how well- with Alibaba now having shattered the record for world’s largest-ever stock market flotation, with bankers handling the flotation on behalf of the Chinese e-commerce superpower had no option but to place more shares on the market to satisfy the demand of hungry investors.

As the markets open for trading investor demand was reported in such a fever pitch that training in Alibaba share were delayed by more than two hours as the company’s banks were reportedly attempting to find anyone holding shares above the original IPO allocation to part with their stock, making the longest such delay in NYSE history for such icons.

The initial value of this year’s prior to the IPO process getting underway were said at $68 each, but shot up to $99 during a frenzy of buying during the opening minutes of trading, eventually settling down to finish the day at $93.89, an increase of 38 per cent.

According to its closing share price on Friday, Alibaba now can boast a market capitalisation in excess of $250 billion, greater than fellow tech giants Amazon and Facebook and leaving long established US financial institutions such as JPMorgan and Procter & Gamble well in its wake.

According to market commentators had Jack Ma had followed his original plan to list his company the Hong Kong Stock exchange, Alibaba, formed only 15 years ago would have become the city’s third-largest company in terms of market capitalization, behind only China Mobile and PetroChina.

The now appears certain that the “overallotment” or “Greenshoe” process, as it is known in the stock markets of the world, is likely to be exercised in full by Alibaba, which will rapidly increase their IPO value of the company by 15 per cent, taking beyond the $25 billion mark.

The Greenshoe option allows bankers controlling any flotation to increase its size, only once trading is under way, an action which is taking as a response to strong investor demand, with the excess shares being bought from the company through underwriters and sold on to investors.

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