Exclusive - Credit Suisse, Morgan Stanley set for Alibaba IPO in Project Avatar

By Matthew Davies

March 14 (IFR) - Credit Suisse and Morgan Stanley have begun working on the listing of Alibaba Group under the code name "Project Avatar", according to two people with knowledge of the situation.

One of the people said the work on the IPO for the Chinese e-commerce company was "not advanced" and "preliminary stuff", including establishing the ideal timing for the listing to take place and the appropriate listing venue.

But they acknowledged that the two banks were best positioned to win the official IPO mandate when that was confirmed. No banks have been officially mandated on the deal yet, the people said.

The two banks have worked closely with the company over several years.

Alibaba is expected to raise around US$15billion (£9.02 billion) in New York in the highest-profile internet IPO since Facebook's US$16billion listing in 2012.

The firm has yet to formally rule out a listing in Hong Kong, although executive vice-chairman Joe Tsai told Reuters on Wednesday the company would "never" change its partnership shareholding structure in order to list in Hong Kong.

A deal size of around US$15 billion is expected to value the firm at US$80billion-$100billion.

Alibaba did not immediately return calls seeking comment.

Part of the reason for Alibaba to favour a listing in the US, rather than Hong Kong, is its partnership structure that allows founder Jack Ma to retain control of the firm despite limited equity ownership.

Ma and his top executives own only about 10% of the firm. US internet firm Yahoo and Japan's SoftBank own 24% and 37%, respectively. There are currently 28 partners in the company. The US market allows dual-class share structures but does not have any exact precedent for the partnership structure of Alibaba.

Alibaba employs more than 20,000 people in over 70 offices in Greater China, Singapore, India, the UK and US. The e-commerce group is so large that it reorganised into 25 business units last year to allow it to adapt to changes quicker.

(This article is from the International Financing Review, a Thomson Reuters publication, http://www.ifre.com)