Chicago, IL – According to a new study by BDO USA, LLP, one of the nation’s leading accounting and consulting organizations, better than three-quarters (77%) of capital markets executives at leading investment banks believe the Alibaba IPO, expected to price later this summer, will be well received by U.S. investors and a similar percentage (74%) of the bankers predict it will be the largest IPO of all-time.
"Based on our survey, the investment banking community is clearly bullish on the upcoming Alibaba IPO, with approximately three-quarters anticipating this offering eclipsing the Agricultural Bank of China's record offering ($19.2 billion) in 2010," said Brian Eccleston, a Partner in the Capital Markets Practice of BDO USA. "They also see a clear connection between the performance of the Alibaba IPO and future offerings from China-based businesses on U.S. exchanges."
After a two-year hiatus, China-based IPOs have begun to return to U.S. exchanges during the past year and about half (51%) of capital markets executives believe there will be a further increase of this trend during the second half of 2014. The other half of the bankers are evenly divided among those who anticipate a decrease (25%) in China-based IPOs and those that believe China-based activity will be flat (24%) with the first half of the year.
More than two-thirds (73%) of I-bankers believe the performance of the Alibaba IPO will have a major impact on the number of China-based businesses deciding to pursue offerings on U.S. exchanges, conversely less than half (43%) predict the Alibaba offering will have a major impact on U.S. businesses deciding to move ahead with an offering.
Yahoo!, which has an approximate 24 percent stake in Alibaba, will be required to sell 40 percent of its shares in the Chinese online giant when it goes public. The capital markets community had various opinions on how this sale will impact Yahoo!, however the consensus of the bankers (77%) is that the impact on Yahoo! will most likely be positive or neutral.
Forty-two percent of the bankers feel the major cash infusion from the sale of the Alibaba investment will allow Yahoo! to make significant investments that can greatly enhance its value, while a much smaller proportion (23%) believe Yahoo! stock may experience a sell-off from investors who can now purchase stock directly in Alibaba. Approximately one-third (35%) of the bankers see no significant impact on Yahoo!, as the reduced position in Alibaba is mitigated by the increased cash for investments.
These are just a few of the findings of The 2014 BDO IPO Halftime Report, a national telephone survey which examines the opinions of 100 capital markets executives at leading investment banks regarding the market for initial public offerings in the United States during the second half of the year. The survey was conducted in June of 2014.
BDO USA is a valued business advisor to businesses making a public securities offering. The firm works with a wide variety of clients, ranging from entrepreneurial businesses to multinational Fortune 500 corporations, on a myriad of accounting, tax and other financial issues.
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