The latest forecast from Morning Star is out for Alibaba’s IPO, and it is a whopper. According to The Wall Street Journal, the firm puts Alibaba’s equity value at $220 billion and predicts that the Chinese e-commerce mega-retailer’s IPO has raised $26 billion.
If Morningstar is right, it would make the Alibaba IPO the largest in history, edging out the Agricultural Bank of Shanghai’s $22.1 billion IPO in Hong Kong in 2010. It would also take down the U.S. recording holder, Visa’s $19.7 billion offering in 2008 and widely trounce Facebook’s $16 billion offering in 2012.
Morning Star said its IPO estimate is based on media reports that Alibaba is likely to offer 12 percent of its stock in the IPO; though other analysts said even that that offering percentage, 26 percent is a rather bullish estimate.
Morningstar further predicted that Alibaba’s operating margins will expand from about 47 percent to around about 49.5 percent over the next five years.
“We believe Alibaba’s IPO should be on the radar screens for investors seeking exposure to China’s emerging middle-class consumers as well as its e-commerce, technology, and logistics industries,” said Morning Star in a release statement, reports The Journal.
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