Bloomberg News

Alibaba.com Said to Plan $200 Million IPO of Website Unit

September 28, 2011

(Updates with Alibaba shares in third paragraph.)

Sept. 28 (Bloomberg) -- Alibaba.com Ltd., operator of China’s biggest online commerce site, plans to raise as much as $200 million from the listing of its website-designing unit in the U.S., two people with knowledge of the matter said.

Credit Suisse Group AG and Morgan Stanley will arrange the initial public offering of Alibaba’s HiChina Group Ltd., said the people, who declined to be identified because the information is private. The IPO may raise at least $100 million, they said.

Alibaba shares have gained 4.7 percent in Hong Kong trading since Sept. 26, when the Hangzhou, east China-based company first disclosed plans for the separate listing of HiChina. Alibaba, whose website is used by companies including Wal-Mart Stores Inc. to find Chinese suppliers, paid 540 million yuan ($84 million) in 2009 for a controlling stake in the website- designing unit.

John Spelich, a spokesman at Alibaba in Hong Kong, declined to comment on the size of the deal.

HiChina is developing cloud-computing services including data storage and e-mail for businesses in China to expand beyond its main operations of hosting websites, Alibaba said last month.

Alibaba closed at HK$7.32 in Hong Kong today, compared with its price of HK$6.99 on Sept. 23, the last trading session before the company disclosed the HiChina spinoff plans. The stock has declined 47 percent this year, underperforming Chinese Internet rivals including Baidu Inc. and Tencent Holdings Ltd.

Sales growth will slow this year as Alibaba tightens screening of its customers to boost protection for buyers, Chief Executive Officer Jonathan Lu said in May. Some overseas buyers were defrauded by bogus sellers on Alibaba’s website, the company said in February.

In 2007, Alibaba.com’s IPO in Hong Kong raised $1.7 billion for the company and parent Alibaba Group Holding Ltd., the biggest initial share sale for an Internet company globally since Google Inc.’s offering in 2004.

The Wall Street Journal reported details of the listing plan earlier today, citing people it didn’t identify.

--Editor: Philip Lagerkranser, Subramaniam Sharma.

To contact the reporters on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net; Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net


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