Alibaba Group Holding Limited (Chinese: 阿里巴巴集团控股有限公司) is a Chinese e-commerce company that provides consumer-to-consumer, business-to-consumer and business-to-business sales services via web portals. It also provides electronic payment services, a shopping search engine and data-centric cloud computing services. The group began in 1999 when Jack Ma founded the website Alibaba.com, a business-to-business portal to connect Chinese manufacturers with overseas buyers. In 2012, two of Alibaba’s portals handled 1.1 trillion yuan ($170 billion) in sales. Suppliers from other countries are supported (with more stringent checks than for Chinese companies), but the company primarily operates in the People’s Republic of China (PRC). At closing time on the date of its initial public offering (IPO), 19 September 2014, Alibaba’s market value was US$231 billion. However, the stock has traded down and market cap was about $212 billion at the end of December 2015.
In September 2013, the company sought an IPO in the United States after a deal could not be reached with Hong Kong regulators. Planning occurred over 12 months before the company’s market debut in September 2014, with Reuters Instrument Code “BABA.N”. The pricing of the IPO initially raised US$21.8 billion, which later increased to US$25 billion, making it the largest IPO in history. Buyers were actually purchasing shares in a Cayman Islands shell corporation, not in the Alibaba group, as China forbids foreign ownership of its companies.
Alibaba’s consumer-to-consumer portal Taobao, similar to eBay.com, features nearly a billion products and is one of the 20 most-visited websites globally. The Group’s websites accounted for over 60% of the parcels delivered in China by March 2013, and 80% of the nation’s online sales by September 2014. Alipay, an online payment escrow service, accounts for roughly half of all online payment transactions within China.
Alibaba is planning to enter India and was in talks with Snapdeal in September 2014.
Alibaba reported sales of $14.32 billion on China’s Singles’ Day on 11 November 2015, up 60 percent from 2014. It is the world’s largest retailer as of April 2016. Alibaba entered India’s e-commerce space with 25% stake in Paytm owner One97.
The company was founded in Hangzhou, and the name came from the character Ali Baba from the Arabian literature One Thousand and One Nights because of its universal appeal. as Ma explained:
One day I was in San Francisco in a coffee shop, and I was thinking Alibaba is a good name. And then a waitress came, and I said, “Do you know about Alibaba?” And she said yes. I said, “What do you know about?”, and she said, “Open Sesame”. And I said, “Yes, this is the name!” Then I went on to the street and found 30 people and asked them, “Do you know Alibaba?” People from India, people from Germany, people from Tokyo and China … they all knew about Alibaba. Alibaba – open sesame. Alibaba is a kind, smart business person, and he helped the village. So … easy to spell, and globally known. Alibaba opens sesame for small- to medium-sized companies. We also registered the name “Alimama”, in case someone wants to marry us!”
According to Li Chuan, a senior executive at Alibaba, the company was planning in 2013 to open traditional brick and mortar retail outlets in partnership with Chinese real estate company Dalian Wanda Group. Additionally, Alibaba purchased a 25% stake in Hong Kong-based Intime Retail in early 2014.
On 5 September 2014, the group—in a regulatory filing with the US Securities and Exchange Commission—set a US$60- to $66- per-share price range for its scheduled initial public offering (IPO), the final price of which would be determined after an international roadshow to gauge the investor interest in Alibaba shares to shareholders.
On 18 September 2014, Alibaba’s IPO priced at US$68, raising US$21.8 billion for the company and investors. Alibaba was the biggest US IPO in history.
On 19 September 2014, Alibaba’s shares (BABA) began trading on the NYSE at an opening price of $92.70 at 11:55 am EST.
On 22 September 2014, Alibaba’s underwriters announced their confirmation that they had exercised a greenshoe option to sell 15% more shares than originally planned, boosting the total amount of the IPO to $25 billion.