Alibaba CEO Expounds on IPO Strategy
Caijing, 12/17/12
Jack Ma, CEO of Chinese e-commerce conglomerate Alibaba Group, recently revealed his plans for the future listing of various Alibaba Group subsidiaries in a television interview in Beijing. According to Ma, Alibaba Group will be divided into as many as 30 companies in the future. Alibaba Group CSO Zeng Ming has previously announced that Alibaba Group would be divided into several dozen companies.
Alibaba Group will be divided according to the following principles: C2C & B2C e-commerce site Taobao will be the first company to be spun off from the group. From Taobao a number of mature and strategic vertical services will be stripped and spun off into independent companies or subsidiaries, such as Taobao Travel and Taobao's wireless services group. Alibaba Group will then split its finance related companies into two to three subsidiaries. Spin-offs from Alibaba Group's data platform service group will center primarily on cloud services provider Alibaba Cloud Computing ("AliCloud") and Taobao's Business Intelligence Department. The company will release more information about the division of Alibaba Group in the future.
According to an industry source, in order to list Alibaba Group, the company needs to first strip off Yahoo China, Taobao and other low profit or un-listable companies. Upon raising sufficient capital, Alibaba Group plans to pay back money borrowed to delist B2B platform Alibaba.com from the Hong Kong Exchange in June and buy back shares of the company owned by Yahoo. Alibaba Group hopes to raise USD 12 bln through its listing.
The possibility of Taobao being listed is low, as the platform operates an asset light, low-profit platform business model, simply hosting content and not being responsible for logistics, manufacturing, or supply chain management businesses.
Over 80% of revenue on Taobao is generated from Zhitongche, the company's paid search ranking service. Revenue from Zhitongche is attributable to Taobao's e-commerce search engine Etao and would continue to be attributable to Etao in the event of an Etao IPO.
Alibaba Group has expressed interest in listing on a US exchange.
Editor's Note: At Alibaba Group's annual organizational department meeting, Ma revealed his plan to list Alibaba Group companies in three waves. The first wave will include B2C e-commerce site TMall, profitable elements of Taobao, and Etao, in addition to Alibaba.com and its small-to-medium enterprise and international businesses. The second wave will include Alibaba Financial, AliPay, and other finance related companies. The third wave will include AliCloud and other information-based businesses.
Keywords: Jack Ma B2B e-commerce Taobao Internet IPO strategy online travel wireless C2C Alibaba.com business model Zeng Ming Alibaba Group Etao Zhitongche TMall Taobao Travel e-commerce search corporate restructuring China Yahoo search advertising Alibaba Financial vertical search
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