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Alibaba Group, the China-based e-commerce company backed by Yahoo and Softbank, has revealed that it will launch an initial public offering (IPO) in the US later this year, which would raise more than $15bn and which will secure a huge payout for Yahoo.
Japan-based conglomerate Softbank is Alibaba’s largest corporate shareholder, owning approximately 37%. US-based search engine company Yahoo paid $1bn for a 40% share in Alibaba in 2005, and although Alibaba and Yahoo reportedly reached an agreement in 2012 whereby Alibaba would buy back half of the US-based company’s stake for $7.1bn, Yahoo’s share currently stands at 24%.
Yahoo Chief Financial Officer Kenneth Goldman has told investors that it will seek to divest a 10% stake in any IPO and retain 14%, which would theoretically generate up to $15.4 billion, according to Bloomberg estimates.
Sources have told Reuters that the Chinese company is currently in talks with Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs Group, J.P. Morgan, and Morgan Stanley over the lead underwriting role in the offering.
The offering is one of several large deals that have recently been announced by China-based companies, most notably by another e-commerce company, JD.com, which filed for a $1.5bn IPO in January.
Alibaba accounted for approximately 45% of China’s e-commerce market in 2013. It reportedly aims to officially file in April and to launch the IPO, which is likely to be the largest in the US since Facebook’s May 2012 flotation, in Q3 2014.