11-4 What do you feel are the best justifications for Alibaba to issue the IPO in...

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11-4 What do you feel are the best justifications for Alibaba to issue the IPO in New York? Are there any downsides to their decision to list in New York? The IPO Alibaba's founder, Jack Ma, had already raised capital from external sources. Japan's SoftBank made a $20 million investment in 2000 and owned 34 percent of Alibaba at the time of the IPO. Yahoo, the U.S. internet company, paid $1 billion for a 40 percent stake in 2005. After a sale of half the shares back to Alibaba in 2012 for $7.6 billion, Yahoo still owned approximately 20 percent of Alibaba at the time of the IPO. The rest of the firm's shares were in the hands of the founder (who alone owned 8.9% of the company), other insiders, and a consortium of investors that purchased a stake in 2011. In 2014, the timing seemed right for an IPO. Stock prices were relatively high and Alibaba was at the historical height of its success and poised for even more. The IPO would enable Alibaba to generate additional capital. Moreover, it would provide an opportunity for its owners to monetize their investments. Yahoo, in particular, was under pressure from its shareholders to harvest some of the gains in its Alibaba position. In May, Alibaba filed paperwork in the United States to sell stock to the public for the first time. Because Alibaba raised capital, it was required to disclose an extensive amount of financial and non-financial information about itself. It released a detailed prospectus, a formal document that provides information about an investment offering to help investors make more informed investment decisions. The prospectus indicated that the use of the proceeds was intended for "general corporate purposes," suggesting that the capital was not associated with any specific new projects, and may be a mechanism to liquidate some ownership shares. The prospectus listed a set of lead underwriters that read like a "Who's Who" of Wall Street: Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Citigroup. The investment banks competed for months to take a slice of the pie, not just for the fees to be collected but for the possibility of selling more services to Alibaba in the future. In fact, Alibaba was expected to pay IPO fees well below the norm because of the competition among banks. Each of the banks had a specific role. Credit Suisse and Morgan Stanley took the lead preparing the prospectus, JPMorgan and Goldman worked on structuring the offer and worked with existing shareholders, and Deutsche Bank and Goldman lead the legal due diligence. Three prominent investment banks were notably absent from the party: Bank of America Merrill Lynch, UBS, and Barclays were missing because they were working on an upcoming IPO for an Alibaba competitor. Alibaba chose to list on the New York Stock Exchange, adopting the ticker symbol "BABA." Since it is a foreign firm, its shares trade as American Depository Receipts (ADRs). Citibank is the depositary bank for the ADRs. This means that Citibank holds the underlying ordinary shares through its local custodian in China and issues 368,122,000 ADRs on the NYSE, each representing one ordinary share of the company. The shares represent about 14.9% of the ownership of Alibaba. The IPO was priced at $68 per share on September 18, 2014, and Alibaba raised $21.8 billion. Trading on the NYSE began on September 19, and shares rose to $92.70, a 36 percent jump. The IPO was very well received in the marketplace! The company exercised an option to sell additional shares at the $68 IPO price, boosting the total amount raised to $25 billion. It was able to do this due to a "greenshoe" option, which allows IPO underwriters to buy additional company shares at the IPO price in order to satisfy more investor demand. Investors welcomed the stock because it gives them (especially U.S. investors) a direct way to hold exposure to China's booming technology industry. Its biggest rival in China is Tencent, but Tencent's shares are not available in the United States. Trading on the SEHK since 2004, investors in the United States would have to make arrangements to purchase Tencent shares in Hong Kong, and that is more difficult than purchasing ADRs at home. The success of the IPO made Alibaba's owners very rich. SoftBank's $20 million investment ballooned to a value of $58 billion at the time of the IPO, although it chose not to sell shares. Yahoo, on the other hand, became the largest seller of shares in Alibaba's IPO, even eclipsing the shares offered directly by the company. Yahoo received more than $9.5 billion for the sale of 140.4 million shares approximately one-fourth of its ownership position. And Jack Ma, who built the company from humble beginnings in his Hangzhou apartment, collected more than $1 billion. Despite the sale of shares to the public, most Alibaba shares remain in the hands of three owners: SoftBank Group holds 29.11% of shares; Yahoo owns 14.95%; and Jack Ma owns 7.00%. Alibaba's IPO no longer retains the record as the world's largest. The Saudi Arabian Oil Company's IPO in 2019 raised $29.4 billion for the state oil company. Saudi Aramco, as the company is colloquially known, listed on Saudi Arabia's Tadawul Exchange. This location limited its appeal to international investors and the shares were marketed mainly to local investors. The third largest IPO was by Japan's SoftBank Group itself, which raised $23.5 billion in 2018. It listed on the Tokyo Stock Exchange. 11-4 What do you feel are the best justifications for Alibaba to issue the IPO in New York? Are there any downsides to their decision to list in New York? The IPO Alibaba's founder, Jack Ma, had already raised capital from external sources. Japan's SoftBank made a $20 million investment in 2000 and owned 34 percent of Alibaba at the time of the IPO. Yahoo, the U.S. internet company, paid $1 billion for a 40 percent stake in 2005. After a sale of half the shares back to Alibaba in 2012 for $7.6 billion, Yahoo still owned approximately 20 percent of Alibaba at the time of the IPO. The rest of the firm's shares were in the hands of the founder (who alone owned 8.9% of the company), other insiders, and a consortium of investors that purchased a stake in 2011. In 2014, the timing seemed right for an IPO. Stock prices were relatively high and Alibaba was at the historical height of its success and poised for even more. The IPO would enable Alibaba to generate additional capital. Moreover, it would provide an opportunity for its owners to monetize their investments. Yahoo, in particular, was under pressure from its shareholders to harvest some of the gains in its Alibaba position. In May, Alibaba filed paperwork in the United States to sell stock to the public for the first time. Because Alibaba raised capital, it was required to disclose an extensive amount of financial and non-financial information about itself. It released a detailed prospectus, a formal document that provides information about an investment offering to help investors make more informed investment decisions. The prospectus indicated that the use of the proceeds was intended for "general corporate purposes," suggesting that the capital was not associated with any specific new projects, and may be a mechanism to liquidate some ownership shares. The prospectus listed a set of lead underwriters that read like a "Who's Who" of Wall Street: Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Citigroup. The investment banks competed for months to take a slice of the pie, not just for the fees to be collected but for the possibility of selling more services to Alibaba in the future. In fact, Alibaba was expected to pay IPO fees well below the norm because of the competition among banks. Each of the banks had a specific role. Credit Suisse and Morgan Stanley took the lead preparing the prospectus, JPMorgan and Goldman worked on structuring the offer and worked with existing shareholders, and Deutsche Bank and Goldman lead the legal due diligence. Three prominent investment banks were notably absent from the party: Bank of America Merrill Lynch, UBS, and Barclays were missing because they were working on an upcoming IPO for an Alibaba competitor. Alibaba chose to list on the New York Stock Exchange, adopting the ticker symbol "BABA." Since it is a foreign firm, its shares trade as American Depository Receipts (ADRs). Citibank is the depositary bank for the ADRs. This means that Citibank holds the underlying ordinary shares through its local custodian in China and issues 368,122,000 ADRs on the NYSE, each representing one ordinary share of the company. The shares represent about 14.9% of the ownership of Alibaba. The IPO was priced at $68 per share on September 18, 2014, and Alibaba raised $21.8 billion. Trading on the NYSE began on September 19, and shares rose to $92.70, a 36 percent jump. The IPO was very well received in the marketplace! The company exercised an option to sell additional shares at the $68 IPO price, boosting the total amount raised to $25 billion. It was able to do this due to a "greenshoe" option, which allows IPO underwriters to buy additional company shares at the IPO price in order to satisfy more investor demand. Investors welcomed the stock because it gives them (especially U.S. investors) a direct way to hold exposure to China's booming technology industry. Its biggest rival in China is Tencent, but Tencent's shares are not available in the United States. Trading on the SEHK since 2004, investors in the United States would have to make arrangements to purchase Tencent shares in Hong Kong, and that is more difficult than purchasing ADRs at home. The success of the IPO made Alibaba's owners very rich. SoftBank's $20 million investment ballooned to a value of $58 billion at the time of the IPO, although it chose not to sell shares. Yahoo, on the other hand, became the largest seller of shares in Alibaba's IPO, even eclipsing the shares offered directly by the company. Yahoo received more than $9.5 billion for the sale of 140.4 million shares approximately one-fourth of its ownership position. And Jack Ma, who built the company from humble beginnings in his Hangzhou apartment, collected more than $1 billion. Despite the sale of shares to the public, most Alibaba shares remain in the hands of three owners: SoftBank Group holds 29.11% of shares; Yahoo owns 14.95%; and Jack Ma owns 7.00%. Alibaba's IPO no longer retains the record as the world's largest. The Saudi Arabian Oil Company's IPO in 2019 raised $29.4 billion for the state oil company. Saudi Aramco, as the company is colloquially known, listed on Saudi Arabia's Tadawul Exchange. This location limited its appeal to international investors and the shares were marketed mainly to local investors. The third largest IPO was by Japan's SoftBank Group itself, which raised $23.5 billion in 2018. It listed on the Tokyo Stock Exchange. 11-4 What do you feel are the best justifications for Alibaba to issue the IPO in New York? Are there any downsides to their decision to list in New York? The IPO Alibaba's founder, Jack Ma, had already raised capital from external sources. Japan's SoftBank made a $20 million investment in 2000 and owned 34 percent of Alibaba at the time of the IPO. Yahoo, the U.S. internet company, paid $1 billion for a 40 percent stake in 2005. After a sale of half the shares back to Alibaba in 2012 for $7.6 billion, Yahoo still owned approximately 20 percent of Alibaba at the time of the IPO. The rest of the firm's shares were in the hands of the founder (who alone owned 8.9% of the company), other insiders, and a consortium of investors that purchased a stake in 2011. In 2014, the timing seemed right for an IPO. Stock prices were relatively high and Alibaba was at the historical height of its success and poised for even more. The IPO would enable Alibaba to generate additional capital. Moreover, it would provide an opportunity for its owners to monetize their investments. Yahoo, in particular, was under pressure from its shareholders to harvest some of the gains in its Alibaba position. In May, Alibaba filed paperwork in the United States to sell stock to the public for the first time. Because Alibaba raised capital, it was required to disclose an extensive amount of financial and non-financial information about itself. It released a detailed prospectus, a formal document that provides information about an investment offering to help investors make more informed investment decisions. The prospectus indicated that the use of the proceeds was intended for "general corporate purposes," suggesting that the capital was not associated with any specific new projects, and may be a mechanism to liquidate some ownership shares. The prospectus listed a set of lead underwriters that read like a "Who's Who" of Wall Street: Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Citigroup. The investment banks competed for months to take a slice of the pie, not just for the fees to be collected but for the possibility of selling more services to Alibaba in the future. In fact, Alibaba was expected to pay IPO fees well below the norm because of the competition among banks. Each of the banks had a specific role. Credit Suisse and Morgan Stanley took the lead preparing the prospectus, JPMorgan and Goldman worked on structuring the offer and worked with existing shareholders, and Deutsche Bank and Goldman lead the legal due diligence. Three prominent investment banks were notably absent from the party: Bank of America Merrill Lynch, UBS, and Barclays were missing because they were working on an upcoming IPO for an Alibaba competitor. Alibaba chose to list on the New York Stock Exchange, adopting the ticker symbol "BABA." Since it is a foreign firm, its shares trade as American Depository Receipts (ADRs). Citibank is the depositary bank for the ADRs. This means that Citibank holds the underlying ordinary shares through its local custodian in China and issues 368,122,000 ADRs on the NYSE, each representing one ordinary share of the company. The shares represent about 14.9% of the ownership of Alibaba. The IPO was priced at $68 per share on September 18, 2014, and Alibaba raised $21.8 billion. Trading on the NYSE began on September 19, and shares rose to $92.70, a 36 percent jump. The IPO was very well received in the marketplace! The company exercised an option to sell additional shares at the $68 IPO price, boosting the total amount raised to $25 billion. It was able to do this due to a "greenshoe" option, which allows IPO underwriters to buy additional company shares at the IPO price in order to satisfy more investor demand. Investors welcomed the stock because it gives them (especially U.S. investors) a direct way to hold exposure to China's booming technology industry. Its biggest rival in China is Tencent, but Tencent's shares are not available in the United States. Trading on the SEHK since 2004, investors in the United States would have to make arrangements to purchase Tencent shares in Hong Kong, and that is more difficult than purchasing ADRs at home. The success of the IPO made Alibaba's owners very rich. SoftBank's $20 million investment ballooned to a value of $58 billion at the time of the IPO, although it chose not to sell shares. Yahoo, on the other hand, became the largest seller of shares in Alibaba's IPO, even eclipsing the shares offered directly by the company. Yahoo received more than $9.5 billion for the sale of 140.4 million shares approximately one-fourth of its ownership position. And Jack Ma, who built the company from humble beginnings in his Hangzhou apartment, collected more than $1 billion. Despite the sale of shares to the public, most Alibaba shares remain in the hands of three owners: SoftBank Group holds 29.11% of shares; Yahoo owns 14.95%; and Jack Ma owns 7.00%. Alibaba's IPO no longer retains the record as the world's largest. The Saudi Arabian Oil Company's IPO in 2019 raised $29.4 billion for the state oil company. Saudi Aramco, as the company is colloquially known, listed on Saudi Arabia's Tadawul Exchange. This location limited its appeal to international investors and the shares were marketed mainly to local investors. The third largest IPO was by Japan's SoftBank Group itself, which raised $23.5 billion in 2018. It listed on the Tokyo Stock Exchange. 11-4 What do you feel are the best justifications for Alibaba to issue the IPO in New York? Are there any downsides to their decision to list in New York? The IPO Alibaba's founder, Jack Ma, had already raised capital from external sources. Japan's SoftBank made a $20 million investment in 2000 and owned 34 percent of Alibaba at the time of the IPO. Yahoo, the U.S. internet company, paid $1 billion for a 40 percent stake in 2005. After a sale of half the shares back to Alibaba in 2012 for $7.6 billion, Yahoo still owned approximately 20 percent of Alibaba at the time of the IPO. The rest of the firm's shares were in the hands of the founder (who alone owned 8.9% of the company), other insiders, and a consortium of investors that purchased a stake in 2011. In 2014, the timing seemed right for an IPO. Stock prices were relatively high and Alibaba was at the historical height of its success and poised for even more. The IPO would enable Alibaba to generate additional capital. Moreover, it would provide an opportunity for its owners to monetize their investments. Yahoo, in particular, was under pressure from its shareholders to harvest some of the gains in its Alibaba position. In May, Alibaba filed paperwork in the United States to sell stock to the public for the first time. Because Alibaba raised capital, it was required to disclose an extensive amount of financial and non-financial information about itself. It released a detailed prospectus, a formal document that provides information about an investment offering to help investors make more informed investment decisions. The prospectus indicated that the use of the proceeds was intended for "general corporate purposes," suggesting that the capital was not associated with any specific new projects, and may be a mechanism to liquidate some ownership shares. The prospectus listed a set of lead underwriters that read like a "Who's Who" of Wall Street: Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Citigroup. The investment banks competed for months to take a slice of the pie, not just for the fees to be collected but for the possibility of selling more services to Alibaba in the future. In fact, Alibaba was expected to pay IPO fees well below the norm because of the competition among banks. Each of the banks had a specific role. Credit Suisse and Morgan Stanley took the lead preparing the prospectus, JPMorgan and Goldman worked on structuring the offer and worked with existing shareholders, and Deutsche Bank and Goldman lead the legal due diligence. Three prominent investment banks were notably absent from the party: Bank of America Merrill Lynch, UBS, and Barclays were missing because they were working on an upcoming IPO for an Alibaba competitor. Alibaba chose to list on the New York Stock Exchange, adopting the ticker symbol "BABA." Since it is a foreign firm, its shares trade as American Depository Receipts (ADRs). Citibank is the depositary bank for the ADRs. This means that Citibank holds the underlying ordinary shares through its local custodian in China and issues 368,122,000 ADRs on the NYSE, each representing one ordinary share of the company. The shares represent about 14.9% of the ownership of Alibaba. The IPO was priced at $68 per share on September 18, 2014, and Alibaba raised $21.8 billion. Trading on the NYSE began on September 19, and shares rose to $92.70, a 36 percent jump. The IPO was very well received in the marketplace! The company exercised an option to sell additional shares at the $68 IPO price, boosting the total amount raised to $25 billion. It was able to do this due to a "greenshoe" option, which allows IPO underwriters to buy additional company shares at the IPO price in order to satisfy more investor demand. Investors welcomed the stock because it gives them (especially U.S. investors) a direct way to hold exposure to China's booming technology industry. Its biggest rival in China is Tencent, but Tencent's shares are not available in the United States. Trading on the SEHK since 2004, investors in the United States would have to make arrangements to purchase Tencent shares in Hong Kong, and that is more difficult than purchasing ADRs at home. The success of the IPO made Alibaba's owners very rich. SoftBank's $20 million investment ballooned to a value of $58 billion at the time of the IPO, although it chose not to sell shares. Yahoo, on the other hand, became the largest seller of shares in Alibaba's IPO, even eclipsing the shares offered directly by the company. Yahoo received more than $9.5 billion for the sale of 140.4 million shares approximately one-fourth of its ownership position. And Jack Ma, who built the company from humble beginnings in his Hangzhou apartment, collected more than $1 billion. Despite the sale of shares to the public, most Alibaba shares remain in the hands of three owners: SoftBank Group holds 29.11% of shares; Yahoo owns 14.95%; and Jack Ma owns 7.00%. Alibaba's IPO no longer retains the record as the world's largest. The Saudi Arabian Oil Company's IPO in 2019 raised $29.4 billion for the state oil company. Saudi Aramco, as the company is colloquially known, listed on Saudi Arabia's Tadawul Exchange. This location limited its appeal to international investors and the shares were marketed mainly to local investors. The third largest IPO was by Japan's SoftBank Group itself, which raised $23.5 billion in 2018. It listed on the Tokyo Stock Exchange.

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Based on the text provided in the images there are several justifications for Alibaba to issue its Initial Public Offering IPO in New York as well as ... View the full answer