FIN3101A Corporate Finance

Instructor: Professor Allaudeen Hameed

Case 2: Alibabas IPO Dilemma: Hong Kong or New York

In preparing for the write-up and discussion of this case, use the following questions to guide you.
(Detail requirements for the written report are given in the course outline. Please read the
requirements again!).
1. Alibabas IPO was offered at a price of US$68 per share. Including the exercise of the
greenshoe option, Alibaba became the largest IPO in the world with a total of US$25 billion
($68x368 million shares) raised. At $68 per share, Alibaba is valued at about US$168 billion.
The end of first day price of Alibaba after listing on NYSE on September 18, 2014 was about
$94. Explain what you think contributes to the difference in the two prices.
2. How does the valuation of Alibaba compare with its peers (internet IPOs)?
3. Describe the dual-class share structure. Why is this structure an important consideration for
Alibaba? Some blog exchanges between Charles Li (HKSE) and Joe Tsai (Alibaba) are provided
in Exhibits A1 to A3.
4. Explain Alibabas decision to list on New York Stock Exchange instead of Hong Kong Stock
Exchange. What are the pros and cons of a listing in NYSE vs HKSE?

The case report should be done in groups assigned.

The deadline for you to upload the report on IVLE is October 15, 2014 (Wednesday), 2014, 6pm. The
hard copy should be handed in at the same time.
The one-page critique of the case(from the non-presenting groups) is due on October 20 (Monday),
6pm.
The presentation/discussion of the case will be conducted during class on Tuesday, October 21,
2014.