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Credit Suisse seen poised for leading role in Alibaba IPO

Employees stand next to a logo of Alibaba (China) Technology Co. Ltd during a media tour organized by government officials at its headquarte
Employees stand next to a logo of Alibaba (China) Technology Co. Ltd during a media tour organized by government officials at its headquarte

By Elzio Barreto

HONG KONG (Reuters) - Credit Suisse is expected to take a leading role in the anticipated IPO of China's Alibaba Group, according to people familiar with the matter, a coveted position that would yield massive fees for the bank as rivals jostle for a role in the offer.

The Alibaba offering may come as early as the end of 2013 and is likely to rival last year's $16 billion IPO by Facebook Inc in terms of size.

Alibaba Group Holding Ltd. has yet to officially announce that it will hold an IPO, but people familiar with the matter say the company has over the past few weeks intensified its meetings with investment banks.

In a sign of how much revenue is at stake, many banks have flown over top executives for the meetings - Citigroup Inc CEO Michael Corbat was recently in China to meet Alibaba executives, according to one person with knowledge of the visit.

Alibaba has yet to shortlist or formally mandate any bank for the IPO, but bankers expect the listing to take place in Hong Kong by the end of this year or early 2014.

Credit Suisse Group AG's transaction history with Alibaba has increased the bank's chances of a key role in any issue, the people familiar with the matter said, adding that Morgan Stanley is also likely to land a top role.

Credit Suisse, Morgan Stanley and Alibaba declined to comment. "As a matter of policy we don't comment on rumor and speculation," Alibaba spokesman John Spelich said.

Last month, billionaire founder and Chairman Jack Ma told the Wall Street Journal the company was ready for an IPO.

The issue is expected to value Alibaba at $60-$100 billion, and could raise $15 billion.

Underwriting fees, estimated at 1.75 percent, would yield about $260 million in commissions split between the banks involved in the deal, Reuters Breakingviews reported last month. That would make Alibaba the biggest Chinese fee payer to global investment banks in a decade.

CLOSE TIES

Credit Suisse was the lead financial adviser to Alibaba when it bought back $7.1 billion worth of its stock from Yahoo Inc last year and was part of the group of banks that provided financing for the deal.

Credit Suisse also advised, and helped finance, Alibaba on a $2.5 billion deal to delist and take private its Alibaba.com business-to-business unit.

Alibaba's Ma, who rarely addresses banking forums, was a guest speaker at Credit Suisse's main Asian investment conference in March and the company recently hired ex-Credit Suisse China Internet and telecom equipment analyst Wallace Cheung for its investor relations department.

Morgan Stanley, the lead underwriter of Facebook's IPO, also worked with Alibaba on financing for the Yahoo share buy-back and was one of the main underwriters of the Alibaba.com IPO in 2007.

MANDATES

The banking industry has kept a close eye on the list of banks involved in an $8 billion loan by Alibaba for signs of who might be chosen for the IPO.

The nine mandated lead arrangers and bookrunners for the loan are Australian and New Zealand Banking Group, Citigroup, Credit Suisse, DBS Bank, Deutsche Bank, HSBC, JPMorgan, Mizuho Corporate Bank and Morgan Stanley.

Goldman Sachs recently joined the group, offering $500 million in financing.

As part of last year's share buy-back deal, Yahoo, which now has a 24 percent stake in Alibaba, can appoint one of the joint global coordinators of any eventual IPO. Yahoo can also review and comment on any documents required to carry out an Alibaba offering, according to a U.S. securities filing.

Japanese telecoms and Internet firm SoftBank Corp may also have a similar agreement with the company, given that its 35 percent stake in Alibaba is larger than Yahoo's share.

SoftBank, locked in a bidding war with Dish Network Corp for U.S. telecoms firm Sprint Nextel Corp, told banks they could hurt their chances of landing a role in the Alibaba IPO if they help Dish, sources familiar with the situation said.

SoftBank did not immediately return a request for comment. Credit Suisse recently dropped out of Dish's financing for Sprint, one person familiar with the matter said.

(Additional reporting by Denny Thomas in Hong Kong; Olivia Oran and Soyoung Kim in New York; Mari Saito in Tokyo; Editing by Michael Flaherty and Miral Fahmy)

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