Alibaba Creates One of Asia’s Largest Charity Funds: A Preamble to a Chart Topping IPO?
Alibaba Creates One of Asia’s Largest Charity Funds: A Preamble to a Chart Topping IPO?
The billionaire and co-founder of Alibaba, Jack Ma has set up trusts that have been estimated by leading news agencies such as Reuters to be among the largest in Asia. This company’s IPO is being touted as one of most highly anticipated events in the corporate world. Indeed, the IPO by Alibaba could well open up a treasure trove only genies can conjure. But while that remains news which is yet to occur, the charitable trusts have made it to leading economic and financial news agencies and websites.
Along with CEO Joe Tsai, Jack Ma has established two trusts for benefiting environmental, educational, health and cultural concerns in Chin. The trusts will be funded by share options of about 2% from the company. Alibaba is preparing to announce plans for a huge IPO. This mega IPO is ranked as one of the biggest initial public offerings in history.
Alibaba has been estimated by analysts as being worth around $170 billion. This places the trust somewhere around $3.4 billion. This company was established around 15 years ago. It has captured a massive share of China’s e-commerce business. Just to give an estimate of its reach- nearly 80% of the online market shopping sites in China belong to Alibaba.
Online shopping has caught in a big way in the current times. In a world where time is cash, online shopping is convenient and easy. It saves customers from the harrowing experience of running to different retail stores looking for the perfect product. Companies like Alibaba have raked in huge profits because of this reason. Moreover, this firm has also expanded to key business areas such as start-up investing and online payment and billing.
International investment banks such as Goldman Sachs, JP Morgan Chase and Co, Deutsche Bank and Credit Suisse are moving in to share a large piece of the IPO pie. Alibaba is said to be paying 1.1% of the IPO proceeds as fees. This means that the fee pool will go beyond $220 million in case the IPO size reaches $20 billion, according to Bloomberg.
Adding shares in its offering in the US will provide Alibaba with the chance to raise funds for itself and its investors. This however risks dilution of the existing stakeholders’ values. The trusts in question are one of the topmost in the world. Jack Ma is currently ranked as the 29th richest man in China. He has a net worth of $4 billion, according to Hurun Rich List. Ma serves as the executive chairman of Alibaba currently.
Ma stresses that the trust funds will work towards improving the health of the planet and striving towards improving the environment. Ma has achieved the distinction of being one of the first billionaires in the world’s second largest economy to set up a major philanthropic charity for a vast number of important causes. Among top business leaders in the world, the most well known philanthropists are Warren Buffet, Bill Gates and Michael Bloomberg.
Jack Ma has achieved positive feedback following his decision to contribute funds to charitable causes. This may also set the trend for other firms and companies across the world to do their bit for social welfare and ecological conservation. Entrepreneurs in China will now be inspired to follow in the footsteps of Jack Ma and Alibaba.
The Chinese internet consumer market is growing by leaps and bounds. As the nation with the world’s largest population, China also has the best technical know-how and technology transfer capabilities. Its youth in international metropolitan cities such as Beijing and Shanghai as well as smaller cities such as Qingdao and Chengdu are tech savvy. Internet consumerism is expanding rapidly in China. Groups such as Alibaba have cornered this market and captured a lion’s share of it. It remains to be seen if the IPO coming up also garners equal popularity among investors and the global markets.
