William Hinman, Simpson Thacher & Bartlett partner (Jason Doiy / The Recorder)
PALO ALTO — Chinese e-commerce giant Alibaba Group Holding Ltd. filed its highly anticipated U.S. initial public offering Tuesday, disclosing that it has tapped Simpson Thacher & Bartlett for legal counsel. Sullivan & Cromwell is advising the underwriters.
The filing notes Alibaba plans to raise $1 billion, but the figure is expected to balloon to north of $15 billion. Alibaba operates an online shopping center, Tmall, and a digital payment operator, Alipay, among other brands. Last year, it posted revenues of nearly $8 billion and net income of $3.4 billion.
Simspon Thacher’s William Hinman Jr. is heading up the deal team advising Alibaba out of Palo Alto, and Leiming Chen and Daniel Fertig are on point in Hong Kong. Sullivan & Cromwell’s Jay Clayton and Sarah Payne out of the firm’s Palo Alto office and William Chua in Hong Kong are among attorneys counseling the underwriters, which include Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Citigroup.
The high-profile status of the offering may shed light on a legal structure required in China but little known globally. Chinese law mandates that licenses to operate websites in the country be held by so-called variable-interest entities. VIEs are wholly owned by Chinese citizens—not the main corporation—and contracts give effective, but not direct, control, the filing notes.
Tokyo-based SoftBank Corp. is Alibaba’s largest shareholder, with 34.4 percent. Yahoo owns 22.6 percent. Though the offering—in which Yahoo will sell about half its stake—will provide a windfall, it will also present a test for the still-struggling Sunnyvale tech company.
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