Chinese e-commerce giant, Alibaba Group Holding Ltd. 's shares priced Thursday at $68 apiece. The price was at the top of the company's expected range of $66 to $68, which was increased from an initial $60 to $66.
The initial public offering on Thursday, which valued Alibaba at $168 billion, will provide Silicon Valley-style payouts. At Alibaba and its affiliates, around 6,000 current and former employees owned stock worth nearly $8 billion before the IPO And that sum represents only a piece of the shares doled out over the years to employees, some of whom cashed out earlier at lower, albeit still lucrative, prices.
The deal sets the stage for the shares to begin trading Friday on the New York Stock Exchange, under the ticker symbol BABA, an event expected to be watched by investors world-wide.
Alibaba plans to expand its business in the United States and Europe after the deal. But in the United States at least, it is not widely known: an Ipsos poll found that 88 per cent of Americans had not heard of the company
The disclosure, first reported by the Wall Street Journal, is just one more complication ahead of what looks set to be the biggest stock market floatation of all time on Friday.
For the pricing, the company and its advisers adopted a strategy of starting relatively low, then nudging the price higher, people familiar with its thinking said. The aim was to build support for the stock from the biggest institutional investment firms, who tend to be most conservative on pricing because they have strict valuation models they follow. Their interests differ from those of faster-money traders who try to grab hot IPOs with fast-rising prices just to "flip" them for a quick profit.
Some analysts and investors have said the deal price gives the stock room to rise on the open market, though its performance could depend heavily on whether markets are volatile on Friday—possibly because of uncertainty around the long-term effects of Scotland's independence vote—and whether bankers correctly read the intentions of investors.
Another wild card: A group of early investors holding more than $8 billion of Alibaba stock aren't subject to a so-called lockup, an arrangement that typically restricts share sales immediately after an IPO.
