Just two days before its first public offering on September 18, Alibaba Group Holding Ltd has raised its price range to $66 to $68 for its initial public offering. The company is likely to raise nearly $21.4 billion at the mid-point of this new range. Yahoo! Inc. (NASDAQ:YHOO) is likely to benefit from the raised share prices.
Earlier, Alibaba decided a price range of $60 to $66 but its latest SEC filing indicates the new price range. The initial price range is crucial for institutions and hedge funds who buy stocks before they start trading in the market. Experts are speculating that Alibaba might still receive a higher price after the stock start trading at New York Stock Exchange on Friday.
The increase in price is excellent news for Yahoo! Inc. (NASDAQ:YHOO) as the company is likely to make $8.1 billion at the mid range of the new price range. Yahoo has a current stake of 22.6% in the company and it is likely to offer 121 million shares at the IPO. Yahoo! Inc. (NASDAQ:YHOO) will still hold its remaining share of 16.3% in Alibaba Group Holding Ltd.
One of the primary reasons for the increased price range is the huge demand for Alibaba’s share in the market. An internal source said earlier,
“Demand has been overwhelming since the launch. Increasing the price range was already on the cards from the beginning.”
Alibaba Group Holding Ltd’s founder, Jack Ma, said on Monday,
“After being listed in the U.S., we will develop our business in Europe and in the U.S. We will not give up the Asia market because, as I would say, we are not a company from China, we are an Internet company that happened to be in China.”
This article has been written by Prakash Pandey.