It has been an interesting IPO year, since the launch of the IPO for Twitter, Alibaba has become the worlds largest IPO launch in history. Despite my limited but expanding knowledge on Initial Public Offerings (having had shares in IMB) I like to keep a close eye on IPO’s and its activities. Regardless of Alibaba being the largest IPO launch, there are many underlying questions of how China itself and the rest of the world will react. Since there are laws that prevent foreign investment in Chinese companies, is this really a proper IPO? Alibaba doesn’t even own the licences to operate its websites, they use “variable interest-entities.” This in itself should raise questions on the risks for an investor and the future stability of the company/stock. Would investors recommend the risk in buying Alibaba stocks? As a person with a interest in investments and stocks, Alibaba is an extremely interesting company to look into. There are pros and cons in the use of “VIE” for Alibaba, some analysts are concerned with the use of the Variable Entities as it could cause future problems with the company. While, neither of Beijing nor China’s courts have advocated for or against the use of VIE’s, only time will tell if issues will arise.
Reference:
http://www.newyorker.com/news/john-cassidy/alibabas-ipo-big-picture
http://www.forbes.com/sites/ryanmac/2014/09/18/alibaba-prices-shares-at-68-as-it-gears-up-for-the-largest-us-ipo-ever/
http://blogs.wsj.com/moneybeat/2014/05/06/alibaba-and-vies-a-primer/