Alibaba Banks Bring Home $300 Million in FeesLeslie Picker
Alibaba Group Holding Ltd.’s underwriters raked in $300 million in fees after completing the largest initial public offering in history.
The banks received 1.2 percent of the proceeds in fees, according to a regulatory filing. The total IPO size increased to $25 billion the company said today, after the underwriters exercised the option to purchase 15 percent more shares.
Pulling off Alibaba’s IPO is a coup for the five lead banks, which were all given an equal stake in the deal’s success. The fee structure is different from typical IPOs in the U.S., where there’s one lead manager that is awarded much of the fees. Alibaba also used an incentive bonus to coax better performance from underwriters.
Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley each took home 15.7 percent of the fees, while Citigroup Inc.’s share represented 7.9 percent, according to a regulatory filing today. Alibaba’s 28 other underwriters earned 1 percent or less each, the filing showed.
Alibaba said that its underwriters bought an additional 48 million shares from the company at the IPO price of $68 each. Including the “greenshoe,” Alibaba was able to surpass the current IPO record held by Agricultural Bank of China Ltd.’s $22.1 billion sale in 2010.