Fourteen years ago, SoftBank founder Masayoshi Son invested $20 million in Jack Ma’s website, telling the English teacher not to give up and assuring him that he was on to something. Now that investment is paying off in a big way.
Mr. Ma’s tiny startup has grown into Chinese e-commerce behemoth Alibaba Group Holding. Now the company, in which SoftBank holds a 37% stake, is preparing to list in the U.S. in what could be one of the largest Internet initial stock offerings ever. On Monday shares in SoftBank rose 4.9%, though the long-expected listing has already helped double SoftBank’s share price from a year ago.
Alibaba’s IPO could raise more than $15 billion, people familiar with the matter say, and analysts expect the listing to value the company above $100 billion. At that price SoftBank could pocket a gain of $30 billion if it were to sell its Alibaba stake. That might be a move worth considering by a company that invested $22 billion in U.S. wireless carrier Sprint last year and is now eyeing a deal to acquire smaller rival T-Mobile US. Still, even if SoftBank holds on to its Alibaba shares, bankers have said the firm’s stake in Alibaba makes them more willing to provide financing for future deals.
Some analysts argue that a more accurate figure for Alibaba’s worth is around $160 billion, rather than $100 billion, given its growing scale and growth potential. In 2012, the combined transaction volume of Alibaba’s shopping sites Taobao and Tmall were more than Amazon and eBay combined, while in the first nine months of 2013 it was more than 60 times as profitable as Amazon.com
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