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Alibaba ponders ways to keep flock together
Publication Date : 06-06-2014
Even as Alibaba Group Holding Ltd prepares for what could be the largest tech initial public offering in history, its top officials are racking their brains on ways to retain talent.
The initial public offering, which analysts estimate could value the Chinese e-commerce behemoth up to US$170 billion, could generate more than a handful of millionaire employees after their shares are unlocked. Company officials are apprehensive that these new millionaires may want to move on, thereby leaving the company bereft of several key personnel.
According to Alibaba's draft prospectus, current and former employees hold 26.7 per cent of the existing shares, and many of then have enhanced their holdings through stock options and other incentives since 1999.
That could translate into roughly $44.8 billion worth of unlocked shares, according to estimates from a Bloomberg survey of analysts.
Alibaba, however, has not disclosed the exact number of employees who hold shares in the company. These could include top managers, marketing personnel and software designers, sources said.
Several BMW dealerships in Hangzhou, where the company is headquartered, have already received inquiries from Alibaba employees asking if they have models in the company's corporate color of orange, Reuters said.
Some of the 20,000 employees have already had the opportunity to sell part of their stakes during previous Alibaba structured share sales through the so-called liquidity programmes, according to the Reuters report.
Such worries have also been expressed in company filings.
"It may be difficult for us to continue to retain and motivate these employees, and this wealth could affect their decisions about whether or not they want to remain with us," said an Alibaba employee in Hangzhou who asked not to be named because of the sensitivity of the issue.
"I know of a director-level executive who is determined to leave after the shares are unlocked."
The concerns are far from overwhelming. According to Reuters, Facebook Inc millionaires spent some of their cash booking a trip with a private space tourism company and on an exploration of ancient Mayan ruins in Central America, while some Google Inc shareholders cashed in during the Internet firm's IPO to travel around the world.
In recent years, Alibaba executives have discussed with employees how the IPO windfall gains could change their lives, and counselled them on becoming "dignified and warmhearted" people who are always willing to help.
Last month, Jack Ma, the company's charismatic founder had told employees of the group's micro-finance business unit that they should not spend their big fortune from the IPO on "glitzy things".
Ma also wrote a memo on Laiwang, a mobile chat app developed by Alibaba, saying that the long-term development of the company relies on attracting high-profile talent and in building up a common value system.
MA: IPO date not yet set
Chinese e-commerce giant Alibaba Group Holding Ltd has yet to finalize the exact date for its initial public offering in the United States, a top company official said on Thursday.
Jack Ma, founder and chairman of Alibaba, denied that the group will list its shares in the US on August 8, which, in Chinese, superstitiously means "double fortune".
"I know that you guys talk about August 8. I also learned it on the Internet yesterday. But for sure, I don't know when and in which stock market we will launch the IPO," Ma said.
Ma made the remarks in Guangzhou, the capital of Guangdong province, on Thursday, after Alibaba signed an agreement with Evergrande Real Estate Group Co Ltd to buy 50 per cent of shares of a soccer club owned by the Guangzhou-based property giant.
The e-commerce giant officially filed early in May to go public in the US in what could be the largest initial public offering ever.
According to Bloomberg, Alibaba may use "BABA" as its transaction code in the US stock market, but Ma refused to make further comments on details of the listing.
"Today we are talking about cooperation with Evergrande in the soccer field, which will strategically help boost business growth for both sides," Ma said.
The agreement with Evergrande marked the latest in a series of high-profile acquisitions by Alibaba as its seeks to expand its business portfolio ahead of the planned listing in the US, which could help raise about $15 billion.
Alibaba operates China's most popular online shopping platform, Taobao, which is estimated to hold more than 90 per cent of the online market for consumer-to-consumer transactions.
The company also acquired a 10.35 per cent stake in Singapore Post for $249 million as part of a strategic cooperation deal at the end of May.