Alibaba Group Holding Ltd. named Jonathan Lu its new chief executive officer, replacing Jack Ma amid speculation China’s largest e-commerce company is preparing for an initial public offering.
Lu, currently an executive vice president, will assume the position on May 10, according to a company statement today. Ma, the company’s billionaire founder, will remain executive chairman and shape strategy, it said.
The move may signal that Alibaba is completing plans for a share sale following a management revamp in January, the June delisting of a Hong Kong unit and the buyback of a stake held by Yahoo! Inc. (YHOO:US) in a deal valuing the Hangzhou, China-based company at $35 billion. Lu has been with Alibaba since 2000 and is the only senior executive with experience overseeing all of its major divisions.
“The fact that Lu was appointed to key positions in challenging times every time, shows that Jack Ma has a lot of faith in him,” said Wendy Huang, an analyst at CIMB Securities Ltd. in Hong Kong. The “market has been expecting an IPO before the end of the year.”
Lu, 43, took over Alibaba’s Taobao online shopping platform in 2010 after building the company’s south China sales team and starting its Alipay online payments business.
Taobao, a cross between Amazon.com Inc. and EBay Inc. (EBAY:US), has more than 500 million registered users and is one of the 20 most-visited websites in the world, according to the company. Its Tmall business-to-consumer website sold $3.1 billion of goods in one day during a Nov. 11 promotion.
The 48-year-old Ma, a former English teacher who has led Alibaba since its formation in 1999, has a net worth of $3.5 billion, according to the Bloomberg Billionaires Index.
Ma and 17 others founded Alibaba as an online marketplace for Chinese companies. The business grew as economic liberalization spurred a boom in manufacturing and trade. It has expanded its workforce to more than 24,000 and added services including cloud computing, online payment and consumer auctions.
After helping establish Alipay and running Taobao, Lu has the right background to run Alibaba, said Jim Tang, an analyst at Shenyin Wanguo Securities Co. in Shanghai.
“Still, the most important person is going to remain Jack Ma,” Tang said by phone today.
Alibaba’s net income increased 81 percent to $484.5 million in 2012, Yahoo said in a March 1 filing. Sales jumped 74 percent to $4.08 billion.
Ma said in June the company could sell shares in an IPO within five years.
“Jonathan has impressed with his curiosity and ability to grasp new ideas, his judgment and decisiveness,” Ma said in a letter to employees.
China had 564 million Internet users at the end of 2012, up 10 percent from the year before, according to the government-run China Internet Network Information Center. China has more Web users than the population of any country except India.
The country also has more online shoppers than the U.S., and the value of its online retail sales may triple to $360 billion by 2015, Boston Consulting Group estimated last year.
In December, Taobao was removed from the U.S. government’s “Notorious Markets” piracy list after significantly decreasing the sale of infringing products, the Office of the U.S. Trade Representative said.
Alibaba agreed in May to buy back about half of Yahoo’s 40 percent stake for about $7.1 billion. Yahoo acquired the shares in 2005 in exchange for $1 billion and ownership of Yahoo’s Chinese operations.
Alibaba also delisted its Hong Kong unit last year after paying HK$18.3 billion ($2.4 billion) to buy back the 27 percent stake held by minority investors.
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