Alibaba: New York Stock Exchange gears up for record-breaking float

Alibaba's Jack Ma has won friends and influenced people including David Cameron

18 September 2014

The biggest float in history will take place on the biggest stage.

Tomorrow — after months of speculation and a two-week globe-trotting roadshow — Alibaba will finally make its stock-market debut on the Big Board, the New York Stock Exchange.

The final price will be set tonight, but if the top of the $66-to-$68-a-share range is reached, the float of the e-commerce giant headed by Jack Ma will raise more than $25 billion (£15 billion), putting it ahead of the $22.1 billion record currently held by the Agricultural Bank of China.

There’s no doubt Wall Street is excited. The NYSE may see more than 100 listings a year, but those that work there remember the significant ones — Visa in 2008, General Motors in 2010, Twitter in 2013. No matter that hardly anyone in New York City, let alone Wall Street, will have used the “Chinese eBay” — Alibaba is set to be record-breaking, and that’s going to cause a buzz.

As the only stock exchange in the world still to use a trading floor, a float at 11 Wall Street is a great publicity opportunity.

The NYSE is keeping schtum on what Alibaba has planned, but companies like to surprise.

Twitter, for example, chose not to have its top brass up on the podium ringing the bell but instead gave that honour to some of its famous users, including Patrick Stewart.

Others have bands playing outside on the sidewalk or — in the case of Candy Crush Saga maker King Digital — people dressed up as sweets. Alibaba will be under pressure to go one better.

Another way its float will be different than if it had chosen arch-rival Nasdaq? The opening bell may ring at 9.30am (2.30pm over here) but shares in Alibaba won’t start trading for at least another quarter of an hour.

Instead, buyers and sellers will join Alibaba top brass in gathering around a so-called designated market-maker on the exchange floor, who will bark out price ranges until a starting price is reached. Only then will trading begin.

The idea behind this price discovery process — unique to the NYSE — is to prevent huge swings in the share price as trading gets under way. It could be quick or, as happened with Twitter, it could take more than an hour (although taking a while isn’t a sign to worry).

The Facebook float debacle in 2012 still hangs over Wall Street. The meltdown of Nasdaq’s systems resulted in a $10 million fine for Nasdaq, which also promised to pay up to $62 million in compensation. Alibaba reportedly shunned the index amid fears over the botched listing.

As part of its attempts to prevent something similar, the NYSE has already held a dummy run of the Alibaba float, giving firms the chance to test out their software, something it first did ahead of the Twitter listing.

Come tomorrow afternoon, when the closing bell rings, those in charge at the exchange can rest easy and reflect on a record-breaking day — as long as things go to plan.

Alibaba: New York Stock Exchange gears up for record-breaking float

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