Alibaba Chief Jack Ma's Unusual Deals Draw Attention Ahead Of Big IPO
International Business Times
Published Jul 08, 2014 08:07AM ET
Alibaba Chief Jack Ma's Unusual Deals Draw Attention Ahead Of Big IPO
By Greg Morcroft - Just as it prepares to launch one of the year's biggest and most-anticipated initial public offerings, Chinese Internet giant Alibaba is coming under further scrutiny from regulators concerned about the details of its founder Jack Ma's business dealings, including making company investments through private projects and investing personally in projects also invested in by the company.
According to the Wall Street Journal, Ma's investments have triggered regulators' concerns because the kind of deals concerning them stand to at least appear to favor the founder and other insiders over regular shareholders.
The report quoted Simon Wong, a corporate-governance adviser affiliated with Northwestern University in Chicago and the London School of Economics, as saying "These situations create conflicts of interest that leave Alibaba’ s minority shareholders more vulnerable to being shortchanged."
Similar concerns in Asian markets led Alibaba to decide to list in New York rather than Hong Kong many reports have explained, as such dealings were prohibited there.
Alibaba declined to comment to the paper, citing a quiet period ahead of its IPO.
In one that caught regulators' eyes, Ma and two other Alibaba insiders borrowed about $1 billion from the company to invest in Chinese cable and Internet TV operator Wasu Media Holding Co..
That's raising concerns with people like raising concerns with people like Michael Reynal, portfolio manager at San Francisco-based RS Investments, who told the Journal, "Alibaba's balance sheet is being used to finance an acquisition by Jack Ma and others."
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Observers have long been concerned with the unusual structure of the company's management and last month updated its IPO filing to reveal the names of the 27-member group who, among other things, will have sole power to nominate a majority of the company's nine directors.
The company has been planning its IPO for quite some time and last month named James R. Wilkerson, former chief of staff to ex-U.S. Treasury Secretary Henry Paulson, to run its international corporate affairs office, signaling its intention to into a major global operation after going public. Alibaba plans to raise $1 billion initially, and then $15 billion to $20 billion, which could surpass Facebook Inc's (NASDAQ:FB)’s $16 billion initial public offering in 2012.
Written By: International Business Times
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