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    Jun 06, 2014

    How will Alibaba staff spend IPO windfall?


    AS ALIBABA prepares for what could be the biggest tech company initial public offering (IPO) to date, the Chinese e-commerce giant has been counselling employees on how to deal with the roughly US$41 billion (S$52 billion) which could be unlocked through a New York listing.

    While some staff have inquired if premium brand BMW sells cars in Alibaba's corporate orange, others may invest windfall stock gains in property in North America or channel funds back into start-up ventures in China, hoping to build future Alibabas, bankers and financial planners said.

    The company has been preparing employees for years on how to manage the influx of cash, warning them not to be carried away and splurge on material goods.

    While Alibaba Group Holding's co-founders, Jack Ma and Joseph Tsai, are already billionaires, many more paper millionaires could be minted once employees are free to sell shares some time after the IPO.

    Current and former Alibaba employees hold 26.7 per cent of the company, having built up their holdings through stock options and other incentives awarded since 1999, according to securities filings, though these did not detail the number of employee shareholders.

    The IPO windfall - Alibaba could be worth US$152 billion, according to the average from a Reuters survey of 25 analysts - will be larger than anything China has seen, because of the depth of the group's employee ownership and the size of the company.

    As happened after Facebook's IPO in 2012, the new Alibaba millionaires are seen driving up demand for luxury cars and apartments, which may boost the economy of China's Hangzhou city, where the company is based.

    But because the stock listing will be in the United States, most of the money employees receive from eventual stake sales would likely be kept offshore, rather than flow back to Alibaba's Chinese base.