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Alibaba IPO Could Be The Biggest Ever


The Chinese Internet giant Alibaba has officially announced its initial public offering. The IPO won't take place right away. But when it does, several months from now, it's expected to be one of the biggest in Wall Street history.

And NPR's Jim Zarroli joins me now to talk about that. Jim, the IPO documents from Alibaba are just out. What's the company saying about its stock offering?

JIM ZARROLI, BYLINE: Well, what it says is it, you know, describing itself, Alibaba, is an online retailer mainly. It says it considers itself an ecosystem that connects buyers and sellers and allows them to do business any time. And it says much of what it does is for the greater good of this ecosystem, which makes it sound a lot like Amazon, actually.

But beyond that, there aren't a lot of details about the IPO. We don't know when it will take place, though it's expected to be in a few months. We also don't know what Alibaba will offer shares for or really how much it hopes to raise. I mean, the documents say it hopes to raise $1 billion but almost everybody thinks, you know, that's just a placeholder; it's actually going to be a lot more than that.

BLOCK: And Jim, a lot of charts and graphics in these documents. There's some graphics here saying that Alibaba's the largest online and mobile commerce company in the world. There's a lot of hype and expectation about this IPO. Why is it such a big deal?

ZARROLI: Yeah. It is - there is. Indeed, it's a - Alibaba's a huge player in a huge Chinese market. It's a conglomerate. It has a lot of different companies. But mainly, as I said, it is a big online retail company called the Amazon of China. In terms of revenues, it's actually bigger than Amazon and eBay combined. You know, American companies tried over the years to break into the Chinese market, didn't have a lot of success. That created opportunities for companies like Alibaba. They've really been able to take advantage of their local market and they've grown very big and powerful. And Alibaba is one of the giants. It was founded by Jack Ma, who's a former English teacher who says he doesn't know very much about technology other than how to send an email, but he really does know how to build a technology company.

BLOCK: Well, how much money is Alibaba expected to raise through this IPO?

ZARROLI: You know, I've seen estimates anywhere from 15 to $20 billion, which would be comparable to the amount of money that Facebook raised in its IPO. Now, one thing you have to take note of is that, you know, we don't know what the state of the Chinese economy is going to be like down the road. There's a lot of speculation about credit problems in China. You know, that would make an IPO more problematic. But barring that, this should raise a lot of money. And one of the beneficiaries, by the way, is going to be Yahoo. Yahoo paid $1 billion for a 40 percent share of Alibaba. It sold some of that and now it owns about 24 percent. But if this goes over in the way we expect it to, Yahoo is going to make billions off the deal.

BLOCK: Jim, why did Alibaba decide to sell shares of its stock on a U.S. exchange?

ZARROLI: Yeah. That was a decision they made earlier this year. I think they announced it in March. They went back and forth. They could've listed it on an exchange in Hong Kong, for instance. But, you know, as you know, the technology sector in the United States is really vital and profitable and cutting edge. And the U.S. markets have access to a lot of investors and I think just Alibaba just wanted to be a part of that.

BLOCK: OK. NPR's Jim Zarroli on the upcoming initial public offering of China's Alibaba, officially announced today. Jim, thanks so much.

ZARROLI: You're welcome. Transcript provided by NPR, Copyright NPR.

Jim Zarroli is an NPR correspondent based in New York. He covers economics and business news.