Temasek set to reap $3-billion windfall from Alibaba IPO

Temasek Holdings logo at the office at The Atrium@Orchard. (Taken on 21st June 2013). Temasek Holdings looks set for a windfall from its stake in Chinese online retail giant Alibaba, which is said to be planning a mega initial public offering (I
Temasek Holdings logo at the office at The Atrium@Orchard. (Taken on 21st June 2013). Temasek Holdings looks set for a windfall from its stake in Chinese online retail giant Alibaba, which is said to be planning a mega initial public offering (IPO) in the United States. -- ST FILE PHOTO: KUA CHEE SIONG

Temasek Holdings looks set for a windfall from its stake in Chinese online retail giant Alibaba, which is said to be planning a mega initial public offering (IPO) in the United States.

The Singapore investment firm and three other partners took a stake worth US$1.6 billion in Alibaba in 2011, which valued the company at US$32 billion.

Today, Alibaba is estimated to be worth more than US$75 billion (S$94 billion), which means the value of Temasek's investment has doubled over two years. Some analysts have even put Alibaba's value at up to US$120 billion, according to reports by news agency Reuters.

Even if Temasek does not sell its stake as part of the IPO, it will be sitting on a major paper gain.

Alibaba is expected to offer some US$15 billion worth of shares in its upcoming IPO, one of the most highly anticipated Internet listings since Facebook's US$16 billion offering last year.

The deal is likely to dwarf that of US-based social media network Twitter, which is also working towards going public. US news reports have suggested that Twitter's IPO could raise about US$1.5 billion, a tenth of what Alibaba is seeking.

Temasek invested in Alibaba in September 2011 alongside US private equity firm Silver Lake Partners, Russian investment company Digital Sky Technologies and Chinese investment firm Yunfeng Capital, which was set up by Alibaba founder Jack Ma and Focus Media's Mr David Yu.

Silver Lake invested about US$300 million, while Temasek put in about US$300 million to US$400 million, according to a Wall Street Journal report at the time, citing unnamed sources close to the deal.

Alibaba has yet to appoint investment banks to arrange its stock sale, but keen interest has been building on Wall Street, with banks pitching fiercely for a role.

The hype is part excitement over the growth potential of China's Internet space and part testament to the success of Alibaba, which was founded as an online business-to-business marketplace in 1999 by 18 people led by Mr Ma, a former English teacher.

It has since grown into China's largest e-commerce company, with 24,000 employees and 70 offices around the world.

Consumers shop with Alibaba via two sites: Tmall, where shoppers buy products from more than 50,000 merchants, and Taobao Marketplace, where more than 500 million registered users buy and sell with one another.

Tmall and Taobao together rang up one trillion yuan (S$204 billion) in sales last year, more than Amazon's US$61 billion (S$76 billion) and eBay's US$14 billion combined.

Analysts have estimated that Tmall commands 57 per cent of the business-to-consumer market in China, while Taobao accounts for as much as 90 per cent of consumer-to-consumer sales.

Alibaba had initially sought a listing in Hong Kong, but had to change course to the US this week after regulators in the territory refused to approve Alibaba's request that its partners retain control over board nominations after the listing.

fiochan@sph.com.sg

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