• Investment Banking

Alibaba Turns to Morgan Stanley in Largest-Ever IPO

Morgan Stanley was joint global coordinator and joint bookrunner in Alibaba’s $25 billion initial public offering—the largest ever globally.

Alibaba Group Holding Limited’s $25 billion initial public offering in September, 2014, was the largest IPO in history. As joint global coordinator and joint bookrunner, Morgan Stanley helped to facilitate this record-setting IPO—a transaction reflective of the massive nature of Alibaba Group itself, the world’s largest online and mobile commerce company in terms of gross merchandise value.

Founded in 1999 by a group of 18 founders in Jack Ma’s apartment in Hangzhou, Alibaba Group has become what could be described as synonymous with online and mobile shopping in China, the largest market globally. For the 12 months ended June 30, 2014, gross merchandise volume (GMV) of more than $296 billion was transacted on the company’s China retail marketplaces, with 279 million active buyers placing more than 14.5 billion orders.

The scale, high growth rate and profitability of Alibaba Group were clear advantages in preparing for the IPO. Leading up to the offering, Morgan Stanley spent six months working closely with Alibaba Group’s management.

During the management roadshow, two Alibaba senior management teams met with more than 2,000 institutional investors. Every one-on-one meeting with investors resulted in an order. Demand reached an unprecedented level—covering the offering multiple times.

The offering was priced at the top end of the revised price range, at $68.00, which gave the company a market value of $177 billion. The closing price of $93.89 on the first day of trading on September 19, 2014, made Alibaba the fourth-largest technology company globally and the second-largest Chinese company by market capitalization.

As part of the IPO, Morgan Stanley was designated as a lock-up release agent—reflecting the high level of trust Alibaba Group has placed with the firm.

Two months following the equity IPO, Alibaba Group priced a debt IPO of $8 billion of inaugural senior unsecured notes across six tranches. This allowed the company to refinance existing bank debt with longer-dated, lower cost and more flexible debt capital.

This was the third-largest global USD debt IPO and the largest USD bond transaction by an Asian corporate ever. Morgan Stanley served as lead left bookrunner, facilitating an expedited execution process by the knowledge of the company and leveraging existing documentation.

Morgan Stanley as sole ratings advisor assisted Alibaba Group to be positioned among the top tier technology credits globally. Alibaba Group also obtained the highest ratings for a non-government related company in the Asia-Pacific.

These transactions extended Morgan Stanley’s long-standing relationship with Alibaba Group, including the IPO of Alibaba.com in 2007, $1.7 billion preferred stock offering in 2012, and $1.1 billion investment in Youku Tudou in 2014. In addition, Morgan Stanley was mandated lead arranger on Alibaba’s $2 billion credit facilities in 2012, $8 billion in credit facilities in 2013, and $3 billion credit facilities in 2014.

A team of banking and capital markets professionals in Hong Kong, Menlo Park, CA, and New York has worked closely for years, seamlessly delivering differentiated advice and execution to Alibaba Group.