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Why a Chinese Company Is the Biggest IPO Ever In the US
An anonymous reader writes The Chinese e-commerce giant Alibaba has made headlines lately in US financial news. At the closing of its Initial Public Offering (IPO) on Friday, it had raised $21.8 billion on the New York Stock Exchange, larger even than Visa's ($17.9 billion), Facebook's ($16 billion), and General Motors ($15.8 billion) IPOs. Some critics do say that Alibaba's share price will plummet from its current value of $93.60 in the same way that Facebook's and Twitter's plummeted dramatically after initial offerings. Before we speculate, however, we should take note of what Alibaba is exactly. Beyond the likes of Amazon and eBay, Alibaba apparently links average consumers directly to manufacturers, which is handy for an economy ripe for change. Approximately half of Alibaba's shares "were sold to 25 investment firms", and "most of the shares went to US investors."
Ali Baba is the wood cutter who uncovers the thieves.
Shares go to Alibaba Holdings Group Limited in the Cayman Islands. The contracts enabling proxy investment by Americans (otherwise illegal in China) have never been upheld in a Chinese court of law. Not something I would want as a long term investment.
On the other hand who owns Alibaba's 120 billion? Americans now.
US investors don't own Alibaba, the Chinese retail giant. Chinese law doesn't allow foreigners to own a Chinese strategic asset. What US investors are buying is interest in a Cayman Island “variable-interest entity”. Stockholders won't have the usual influence on corporate governance or management.
http://www.marketwatch.com/sto...