How Can Ali Retain Its Riches After IPO?

Alibaba group is preparing for IPO, while directing its employees to deal with nearly $41 billion of cash that will be available from IPO.

Investment bank and financial advisor said BMW Agent Some alibaban employees have been consulted, asking if they will buy models with orange logo of the Alibaba company, other employees or invest in North American real estate, or enter the field of venture capital in China, seeking to build the next Alibaba.

However, as early as a few years ago, the Alibaba had instruct their employees to manage the wealth and remind them not to forget themselves and extravagantly.

IPO's new rich man

Ma Yun and Cai Chongxin, co-founder of Alibaba group, have become billionaires. After the Alibaba completes IPO, once the shares held by employees are lifted, there will be more millionaires.

According to the SEC documents disclosed by Alibaba, Alibaba has implemented stock options and other incentive awards since 1999, and now owns 26.7% of the company's shares with former Alibaba employees. However, Alibaba did not disclose the total number of employees.

According to the survey of 25 analysts, the current valuation of Alibaba is about $152 billion, which is not comparable to other companies in China in terms of employee stock ownership ratio and company size.

Not just managers, software engineers, sales and marketing staff, and Alipay employees will also be the beneficiaries of this IPO feast.

At present, Alibaba has about 20 thousand employees. In the former Alibaba's structured stock sales transaction (known as the "liquidity plan"), some employees sold some of their holdings.

Alibaba admitted in the IPO prospectus that the company was worried that employee shareholders might leave the company after "getting rich". "For us, it is not easy to retain and motivate these employees, because these wealth will affect their decision to leave."

In the past few years, Alibaba executives (including Ma Yun and former chief operating officer of Alibaba) Guan Mingsheng and their employees have talked about this topic and remind them not to pursue too luxurious material life, people familiar with the matter said.

"I remember Guan Ming Sheng once made a speech to his staff about" money is what ", he encouraged his employees to regard money as something that could bring more choices, but these choices are not material life. People familiar with the matter said.

How to spend "windfall"

After the Alibaba IPO, the new aristocratic aristocrats may spawn the demand for luxury cars and Luxury Apartments and drive the economic growth of Hangzhou, the headquarters of Ali.

According to media reports, the Facebook rich have used some of their "windfalls" to travel, or to explore the ruins of the ancient Maya city. Some Google employees used IPO funds to travel around the world, or to invest in documentary production, or to open a health theme cafe.

According to reports, the BMW agent in Hangzhou has gone to Alibaba to consult employees on the spot to ask if they want to have the orange logo of the Alibaba company.

However, the existing "tightening" economic policy of the Chinese government may inhibit such extravagant consumption, because most of the funds obtained by Alibaba from final stock sales transactions may remain in offshore accounts rather than inflows into China.

People familiar with the matter say they may invest in Vancouver real estate. Not many people will choose to buy Ferrari luxury cars or invest in Chinese real estate in China.

Investment banks and financial advisers expect that most of the money that Alibaba employees can cash in from IPO will be invested in technology start-ups if they are transferred to China.

Hangzhou is the cradle of Chinese entrepreneurs. According to the data provided by Knight Frank, a world-renowned property consultant, last year, Hangzhou had more than 560 millionaires. In the next 10 years, according to the so-called net asset index, the number of super rich in Hangzhou will exceed that of Losangeles.

A period of months or even years of embargo.

　　 Alibaba Most of the wealth is in the hands of Ma Yun, Cai Chongxin and other executives. They form the so-called "Alibaba partners".

According to the SEC documents, 22 of these 28 partners came from Alibaba, and 6 came from Alibaba affiliates or subsidiaries. They held a 14% stake in Alibaba, with a market value of more than 21 billion dollars.

The prospectus submitted by Alibaba did not specify in detail. company Executives (including CEO Lu Zhaoxi, CFO Wu Wei, COO Zhang Yong, CTO Wang Jian, general legal adviser Shi Yide) specific shareholding ratio. However, the total shareholding of the five executives is less than 1%.

Once the stock "unlock" expires, Alibaba IPO will provide employees with the greatest opportunity to cash in. According to the SEC document, the last stock exchange transaction took place in 2011. At that time, Alibaba employees sold $2 billion worth of stock to investors, including private Holdings Company DST Globa and silver lake. In the same year, Ma made a cash dividend of $162 million by selling its shares, while Cai Chongxin cash in 1.08 dollars, CEO Lu Zhaoxi cash in 37 million 700 thousand dollars, CFO Wu Wei Cash 4 million 990 thousand dollars, former COO Guan Ming sang cash 40 million 500 thousand U.S. dollars, Alibaba early employees, also vice president of enterprise department Sabrina Peng Cash 4 million 600 thousand dollars.

The largest shareholder of Alibaba is Softbank, with a shareholding ratio of 34.4%. The second largest shareholder is YAHOO, holding 22.6%. Other shareholders include Silver Lake and DST Global and Temasek.

IPO insiders say that after IPO, employees need to go through a period of months or even years of "ban period" before they can sell their holdings.

Alibaba B2B The business went public in 2007, when the company employees waited 6 months before allowing them to sell their 40% stake in an employee stock trading plan, and the remaining 60% shares were allowed to be sold after the 1 year ban period.