Alibaba Group’s biggest shareholders have backed a partnership structure that is at the centre of a debate over where the Chinese e-commerce giant may list its shares in the most highly anticipated internet initial public offering (IPO) since Facebook’s $16-billion offer last year.
Alibaba, which analysts value at as much as $120 billion, appears to have failed to convince Hong Kong regulators to waive tough listing rules, potentially handing the lucrative IPO to rival US market operators.
Founded by billionaire entrepreneur Jack Ma, Alibaba wants to find a home for its stock where its 28 partners, mainly founders and senior executives, can keep control over a majority of the board, even though they own only around 13% of the company.
In the first public comments from one of those partners, executive vice-chairman Joseph Tsai defended Alibaba’s corporate structure on Thursday, saying it is a “living body” intended to preserve the company’s culture.
While losing such a large IPO would be a blow to the Hong Kong stock exchange — Alibaba could seek to raise as much as $15 billion in the share sale — regulators there have stood firm in their defence of small investors and a policy of treating all shareholders alike.
“We understand Hong Kong may not want to change its tradition for one company, but we firmly believe that Hong Kong must consider what is needed in order to adapt to future trends and changes,” Tsai, one of Alibaba’s 18 founders in 1999, wrote in a blog post. On Friday, Alibaba received the backing of both Japanese wireless carrier SoftBank and Yahoo, its two largest shareholders with stakes of 36.7% and 24%, respectively.
Hong Kong Exchanges and Clearing which is both the regulator of new listings and a publicly traded company that benefits from IPO fees and subsequent stock trading volumes, has insisted that its first duty is to protect all shareholders.