Shareholders back Alibaba's controversial corporate structure
ReutersReuters--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 IPO since Facebook Inc's US$16 billion offer last year.
September 28, 2013, 12:05 am TWN
Alibaba, which analysts value at as much as US$120 billion, appears to have failed to convince Hong Kong regulators to waive tough listing rules, potentially handing the lucrative IPO to rival U.S. 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 percent 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 US$15 billion in the initial public offering - regulators there have stood firm in their defense 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 Corp and Yahoo Inc, its two largest shareholders with stakes of 36.7 percent and 24 percent, respectively.
“Alibaba has built a phenomenal business and created tremendous value for its shareholders over the years,” SoftBank CEO Masayoshi Son said in a statement. “We are therefore very supportive of the Alibaba partnership structure.”
In a brief statement, Jacqueline Reses, Chief Development Officer at Yahoo and an Alibaba board member, said: “In a fast-moving technology market, it's critical that a company's leadership can continue to preserve its culture and set its strategic course for the future.”