Alibaba IPO estimated at $110bn

Alibaba could profit by as much as $25 billion [£15.4 billion] based on an initial public offering value of $110 billion [£68.1 billion] with the company still yet to set a date on its flotation.

Private company intelligence firm PrivCo made the projections and added that the Chinese online marketplace will look to raise something between $18 billion [£11.1 billion] and $25 billion [£15.4 billion] in an IPO expected in January or February.

“Alibaba’s growth has been nothing less than breathtaking. Based on PrivCo’s exclusive private company financials of Alibaba, yet-to-file for its IPO, PrivCo conservatively values the company at $110 billion [£68.1 billion], making founder Jack Ma’s over 30 per cent stake worth more than $33 billion [£20.4 billion]. It’s one of the most stunning self-made billionaire entrepreneur success stories China has seen in a generation,” PrivCo CEO Sam Hamedeh told Tech City News.

Alibaba has seen unprecedented success in recent times with China’s largest e-commerce firm seeing profits treble in the first quarter of 2013 as net income rose to $669 million [£440 million] from $220 million [£145 million] the previous year. As impressive as those figures are, PrivCo expects even more of the company for the remainder of the year.

“Growth in operating profit has been the most impressive metric thus far. It is projected to have grown at a 216 per cent CAGR [compound annual growth rate] between fiscal years 2011 to 2013, beating even revenue’s 70 per cent growth rate,” PrivCo added.

Alibaba was formed back in 1999 as a marketplace for Chinese companies to sell goods and employs 24,000 people with the company growing as it continues a trend of acquiring small companies to add more to its online services.

In addition to founder Ma, Yahoo - which owns 24 per cent of the company - is set to make a handsome profit when Alibaba does finally implements its plan to float on the stock market.

Yahoo has already profited from its original stake when it sold back 20 per cent of its shares to Alibaba for $7.1 billion [£4.54 billion] in 2012. It estimated back in July that its remaining stake is worth $8.1 billion [£5.33 billion] with the number likely to rise as it gets closer to the IPO launch.

Image Credit: Flickr (401(K) 2013)