Alibaba Group Holding Ltd., China’s largest e-commerce company, may have a market value of as much as $200 billion by the end of 2014 after an initial public offering, said Carl Huttenlocher, chief investment officer of hedge-fund company Myriad Asset Management Ltd.
SoftBank Corp., a Tokyo-based wireless carrier with a 35 percent stake in Alibaba, may see its market value boosted by as much as 75 percent as a result, according to Huttenlocher, whose Hong Kong-based company now manages $2.3 billion of assets.
Alibaba may have an IPO this or next year that values the Hangzhou, eastern China-based company at as much as $100 billion, rivaling the $104 billion Facebook Inc. got at its May 2012 IPO price, analysts including Eric Qiu at Guosen Securities Co. have said. Facebook has a market value of $55.5 billion, according to data compiled by Bloomberg.
Alibaba, which made founder Jack Ma a billionaire, will benefit from China’s expanding retail market, increasing use of Internet and smartphones, and a fragmented retail market, Huttenlocher said. Ma said last year that the company may go public within five years.
“It’s much easier to gain share in a fast-growing pie,” he said at the first Karen Leung Memorial Investor Conference in Hong Kong yesterday. “The e-commerce market in China is an enormous and very fast growing market that we feel is also getting share from the offline retail market. Alibaba is the dominant company in the sector and has pricing power.”
Retail sales in China are growing 14 percent a year, against 3 percent in the U.S., Huttenlocher, a former Asia head of New York-based Highbridge Capital Management LLC, said.
About 42 percent of Chinese use the Internet now, compared with more than 80 percent in the U.S., he said. The top 20 traditional offline retailers in China command less than 10 percent of the market share, lower than the 40 percent to 50 percent in the U.S., he said.
The projection of a market value of $150 billion to $200 billion by end-2014 assumes 14 percent of Chinese retail sales will be conducted online by 2015, Huttenlocher said. Alibaba, especially its Tmall.com unit, may have a shrinking share of a bigger market yet it also takes into account its pricing power as the dominant e-commerce company, he said.