On September 17, a world-renowned fund manager criticized the corporate structure as Alibaba Group was about to list on the New York Stock Exchange's IPO (IPO).
Mark Mobius, head of emerging markets at Franklin Templeton Investments and known as the "father of emerging markets," warned that the corporate structure of Alibaba Group would make it almost impossible for shareholders to manage Impact; and, once there is a problem within the group, shareholders have little access to any legal resources.
Mai Pusi pointed out that for the shareholders of Alibaba Group, the combination of these two factors will bring about a "very dangerous situation."
Prior to this, analysts have been worried about two issues in the Alibaba Group's corporate structure. The first problem is that the partners of Alibaba Group have control over the composition of the group's board of directors, and shareholders do not have much say.
Another problem is that Alibaba Group will be listed as a variable interest entity (VIE). Although it is only through this form that the strict Chinese overseas investment regulations can be bypassed, the variable interest entity will bring a complex ownership structure, which may mean that for Alibaba Group investors, if they want to target If the group takes legal action, then there will be a feeling of not starting.
"You will have to file a lawsuit in a Chinese court, and that will be very difficult, even impossible," said Mai Pusi. “The founders of the group control the key assets, which makes you feel helpless if something doesn't get right, and this should be a bottom line.â€
Prior to this, Alibaba Group had negotiated with the Hong Kong Stock Exchange on IPO matters, but in the initial negotiations, its corporate structure has been criticized by the latter because the exchange is worried about the issue of shareholder protection. Subsequently, Alibaba Group went to the United States and was approved by the US Securities and Exchange Commission (SEC) to list on the New York Stock Exchange IPO.
However, given the dominant position of Alibaba Group in China's e-commerce market, is the group's IPO listing transaction irresistible for investors? In the view of Mai Pusi, this is not the case. He warned that buying shares in IPO companies is risky.
“The advice I would like to give investors is that you have to be very cautious, look closely at the inconspicuous contractual provisions, and if you are unable to control any resources (after purchasing IPO shares), then don’t get involved. Said Mai Pusi.
However, concerns about the corporate structure of Alibaba Group do not seem to suppress investor interest in the group. On Tuesday, Alibaba Group, which is conducting a global roadshow, raised its IPO pricing range from $60 to $66 per share to $66 to $68 per share, indicating that investors have high demand for their stock.
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