The fortunes of Alibaba Group Holding Ltd.’s billionaire co-founders have more than tripled this year as the company prepares for an initial public offering.
Alibaba Chairman Jack Ma, 49, has a $12.5 billion net worth, up $8.9 billion year-to-date, according to the Bloomberg Billionaires Index. Joseph Tsai, the company’s executive vice chairman, controls a $4.8 billion fortune.
China’s biggest e-commerce company is valued at $168 billion, based on the average calculations of 12 analysts surveyed by Bloomberg News on April 17. The valuation gives Alibaba a bigger market capitalization than Facebook Inc. (FB:US) and about half that of Google Inc.
Ma “had the foresight by going into the e-commerce area,” Ronald Wan, chief China adviser at Asian Capital Holdings Ltd., said by phone from Hong Kong. “He’s a market leader. His reputation, business philosophy, and foresight have made him a successful businessman.”
Alibaba filed a prospectus yesterday with the U.S. Securities and Exchange Commission that looks to sell about a 12 percent stake, which would make the offering around $20 billion based on the estimated value. The filing has a $1 billion placeholder amount, which is used to calculate registration fees and will change. The offering, expected in the coming months, will probably make the company’s 28 partners and founders millionaires.
The Hangzhou-based company was valued at $40 billion after a September 2012 transaction in which Yahoo Inc. (YHOO:US) sold part of its stake back to Alibaba. Yahoo owns 22.6 percent of the company. Alibaba’s valuation rose to $153 billion in February, based on the average calculations of 10 financial-services companies, including Goldman Sachs Group Inc., Sanford C. Bernstein & Co. and Macquarie Group Ltd.
“Jack Ma is a very competitive individual,” said Anthony Cragg, a Singapore-based fund manager at Wells Fargo Asset Management, which oversees about $487 billion of investments. Alibaba’s “footprint is incredible. It’s a fairly easy job to convert that to other activities like Alipay and other financial services.”
Inside China's E-Commerce Giant
Still, Cragg said plans for the share sale come at a time when the IPO market is “shaky.” His funds invested in Alibaba through Softbank Corp., a shareholder in Ma’s company.
Florence Shih, a spokeswoman for Alibaba, declined to comment on the wealth of Ma and Tsai.
Ma controls 206.1 million shares of Alibaba, 35 million of which are held by a non-profit organization called SymAsia Foundation Ltd., according to the filing. Another 50 million shares are held by APN Ltd., a Cayman Islands company in which Ma has a 70 percent equity interest and Tsai has 30 percent. After subtracting the shares held by the foundation, Ma’s economic interest in Alibaba is about 7.4 percent.
The pair has pledged all of their shares in APN to secure a future liquidity event involving Alipay, an online-payments business, according to a framework agreement detailed in the prospectus. Under terms of the agreement, APN’s liability to fund the event, which could be in the form of a public offering, sale or transfer, will be capped at $500 million.
In addition to Alibaba, Ma has an interest in Yunfeng Capital, a private-equity firm he co-founded in 2010. The billionaire said in a Sina Weibo posting in 2013 that any profits from Yunfeng would go to charity.
He also acquired a 20 percent stake in financial software company Hundsun Technologies in April 2014, and owns 5.5 percent of Huayi Brothers Media Corp. (300027), a Beijing-based film and TV production company.
The former English teacher also owns a five-bedroom, 7,088 square-foot duplex on the 52nd floor of a Mid-Levels district tower in Hong Kong, according to the Standard. He paid HK$300 million ($38.7 million) in November 2007 for the penthouse, with the per-square-foot price setting a record for residential properties in Asia at the time, the Hong Kong newspaper said.
Alibaba operates online platforms such as Taobao Marketplace and Tmall.com that connect retail brands with consumers. The Chinese company makes most of its sales from commissions and advertising and competes with Tencent (700) and Baidu Inc. (BIDU:US) for the more than 600 million Internet users in China.
Tsai will own about 3 percent of Alibaba after the offering. The Yale Law School graduate quit a $700,000-a-year private-equity job to join Alibaba for $50 a month and an interest in the business. He was promoted to executive vice chairman in 2013, less than a year after leading negotiations to repurchase an Alibaba stake from Yahoo.
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