Which Investors Will Cash In On Massive Alibaba IPO

Posted: May 7 2014, 4:29am CDT | by , in News | Latest Business News


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Which Investors Will Cash In On Massive Alibaba IPO

Alibaba filed its long-awaited public offering Tuesday, seeking to raise as much as $1 billion (a placeholder total) at a still unknown price. The Chinese Internet giant with $5.6 billion in annual sales should be the largest IPO in history–and a massive payday for investors like Yahoo and Silver Lake. But the biggest winner may be SoftBank, the Japanese company that led a $20 million investment round in 2000.

SoftBank currently controls 797,742,980 shares of the company, good for 34.4%. Yahoo, meanwhile, owns 523,565,416 shares, or 22.6%, and will be selling a 10% stake in the IPO. By comparison, CEO Jack Ma holds 8.9% of the company personally and through an offshore company, APN Ltd, while cofounder Joseph Tsai holds 3.6%.

In its S-1, Alibaba reveals that SoftBank will continue to hold more than 30% of the company after the public offering, a note made in its risks to its future business. SoftBank will control a board seat alongside another corporate stakeholder, Yahoo. SoftBank had led a $20 million dollar investment in Alibaba back in 2000 and later invested $50 million through a 2003 joint venture, Taobao Marketplace. SoftBank would also purchase another $30 million in convertible notes in the same year.

Yahoo, meanwhile, bought 40% of Alibaba for $1 billion in 2005, a move that has famously kept Yahoo’s stock up in later years, buying out SoftBank’s Taobao investment for $360 million. SoftBank added another $180 million investment at the time.

But who were the venture investors who stand to cash in? Alibaba’s S-1 is vague for now, noting only that 171,007,006 shares of the company are held in the United States as of December 31, 2013. But the company raised several rounds of funding from a mix of investors including both venture capital and private equity.

In Oct. 1999, according to Crunchbase, Alibaba took $5 million in early funding from Goldman Sachs and Fidelity Growth Partners Asia. One year later, it took on the $20 million funding round likely referenced in its S-1 (Crunchbase has the round at $25 million) led by SoftBank Capital, along with FGPA and Azia Funds. Then in 2004, the company reportedly raised $82 million in fresh funds from Venture TDF and GGV Capital, with FGPA and SoftBank returning. (This may include the $20 million in notes the company reports in its S-1 that SoftBank converted to stock starting the year before.)

Most recently, Alibaba took on $8 billion in financing from a group of banks, including a reported $500 million from Goldman Sachs.

I’ve reached out to all those investors for comment and will update this post as I have more information.

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