Oct. 22 (Bloomberg) -- Alibaba.com Ltd. will raise as much as HK$11.6 billion ($1.5 billion) after increasing the price of the shares in the biggest initial public offering by a Chinese Internet company.

The operator of China's largest trading Web site for companies and parent Alibaba.com Corp. will sell shares for HK$12 to HK$13.50 apiece in Hong Kong, the Hangzhou, eastern China-based company said in a statement today. The price is about 13 percent more than the initial range marketed to investors.

Orders for shares from institutional investors exceeded supply within an hour after Alibaba started taking applications, people familiar with the matter said. Alibaba lured buyers to the IPO in Hong Kong, where the benchmark Hang Seng Index has gained 42 percent this year, with a forecast for profit to almost triple in 2007, as more Chinese companies buy and sell products over the Internet.

``China and Internet are a great combination,'' said Wong Soon Tong, who helps oversee $3 billion at UOB Asset Management in Singapore. ``There is a lot of interest in China and in Internet stocks right now.'' Wong said UOB may buy Alibaba shares.

The company and its parent, which initially marketed its shares at HK$10 to HK$12, are selling a combined 858.9 million shares, or a 17 percent stake.

Yahoo, Cisco

Yahoo! Inc., Cisco Systems Inc. and AIG Global Investment Corp. (Asia) Ltd. are among eight investors that have committed to buy HK$2.3 billion of Alibaba's IPO shares, or about one- fifth of the offering, the statement said.

The other investors are Industrial and Commercial Bank of China (Asia) Ltd., the family of Sun Hung Kai Properties Ltd. Chairman Walter Kwok, Wharf (Holdings) Ltd.'s Chairman Peter Woo, Malaysian billionaire Robert Kuok, and a unit of Taiwan's Hon Hai Precision Industry Co.

In its share sale document, Alibaba forecast profit of at least 622 million yuan ($83 million) this year, up from 219.9 million yuan last year. Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley are arranging the sale.

Alibaba will seek acquisitions to add new technologies and users to its online trading service, Chief Executive Officer David Wei said in a video conference today.

Business Development

The company will use 60 percent of the estimated proceeds of as much as $381 million from the share sale on purchases and business development, he said.

Parent Alibaba.com Corp., which may raise net proceeds of as much as $1.06 billion from the offering, will have more than $2 billion in cash following the completion of the sale, Chairman Jack Ma said today.

Sunnyvale, California-based Yahoo owns a 39 percent stake in Alibaba.com Corp. after swapping $1 billion and its China unit for the holding in 2005. Softbank Corp., Japan's third- biggest mobile-phone carrier, owns a 29.3 percent stake.

At the high end of the new price range, the company would be valued at $8.8 billion, or 54 times estimated 2008 profit before stock-based compensation, according to people familiar with the deal. The price-earnings multiple will rise to as much as 66 times after such expenses are deducted, according to the people.

Yahoo's Stake

Yahoo's stake in Alibaba.com may be valued at as much as $3.27 billion after the IPO, adding up to $1.33 to Yahoo's stock price, Jefferies & Co. analyst Youssef Squali in New York said today in a note.

Yahoo shares rose 82 cents, or 2.8 percent, to $29.85 at 4 p.m. New York time in Nasdaq Stock Market trading. They have risen 17 percent this year.

Baidu.com Inc., which owns China's most popular Web search site, is trading at 79 times estimated 2008 earnings, according to data compiled by Bloomberg. Tencent Holdings Ltd., China's biggest online chat-service provider, is valued at 50 times.

Global Sources Ltd., Alibaba's closest rival, trades at about 33 times estimated 2008 earnings. Alibaba had 69 percent of the Chinese electronic-commerce market between businesses in the second quarter, compared with 8.4 percent for Global Sources, according to research company Analysys International in Beijing.

``More and more Chinese companies are beginning to see the Internet as a way to help grow their businesses, which will in turn help make Alibaba's services more popular,'' said Edward Yu, chief executive officer of Analysys International.

Alibaba shares are scheduled to be priced Oct. 27 and begin trading on the Hong Kong stock exchange Nov. 6.

To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net; John Liu in Shanghai at jliu42@bloomberg.net

Last Updated: October 22, 2007 16:08 EDT