Whole new level All for one and one for all – that seemed to be Alibaba’s motto when it came time for the internet giant’s record-setting IPO. Levelling the playing field turned out to be good business for all concerned in the US$25bn deal. In the old folk tale, only Ali Baba knew how to access the secret cave of treasure. However, with the largest IPO in history, the real-world Alibaba has done a particularly good job of spreading the wealth around. The company’s New York Stock Exchange debut this year is already the stuff of legend; Alibaba shares have risen nearly 70% in less than two months. Yet the success of the US$25bn sale, one of the most eagerly awaited listings ever, was hardly pre-ordained. Chinese companies pursuing US listings have a decidedly mixed record. The e-commerce giant itself had already faced down one stock crisis in Hong Kong, where Alibaba.com was delisted in 2012, and founder Jack Ma was warned to pay heed to the troubles of previous mega-deal IPOs, such as Facebook’s disastrous debut two years earlier. At first, Ma considered doing another Hong Kong listing, but, as it became clear that the regulatory changes he considered necessary would take months (at least) to push through, he set his sights on the US market instead. Chinese culture, it is said, values collective effort over individual achievement – and Ma seemed determined not to repeat the mistake of Mark Zuckerberg, whose stumbling IPO was dominated by just one bank. For its adviser, the company turned to Rothschild, where Alibaba’s head of corporate finance had earned his stripes. There, head of Asian equity advisory Claire Suddens-Spiers and head of North American equity advisory Matthew Sperling crafted engagement letters for a syndicate structure that omitted the lead-left role typical in most US IPOs. Instead, there would be a level playing field among the six joint bookrunners selected: Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Morgan Stanley and Citigroup. “It could have been incredibly combative,” said Anthony Kontoleon, head of global equity capital markets syndicate at Credit Suisse. “It could have been a client saying: ‘We are going to reward you at the end based on what we hear and create an incentive structure where [the banks involved] don’t collaborate’.” Still, it was not going to be anything like that. All the work was to be shared among teams of two banks – “Noah’s ark style”, as one participant put it – that would handle everything from prospectus drafting to legal documentation, roadshow materials preparation, offer structure, public relations, financial modelling and investor targeting.New way to do it None of the bankers invited had been told in advance where the kick-off meeting in Hong Kong on March 25 would be held, and all had to wait with their cars for a call with the location 45 minutes before start time – the Aberdeen Marina Club, where Alibaba had booked under the name of a non-existent industry conference. Every single attendee had to stand and state his name, to assure all present there were no journalists on hand. Even JP Morgan vice-chairman Jimmy Lee had to do it, and he was one of the most well-known people in the room – at least until Ma himself turned up, halfway through, to rally the troops. With the deal now live, the most important task for the bookrunners was to reach consensus on the top 150 investors likely to participate. Each bank submitted a list, including the expected order size from each account. The data were cross-checked with each investor’s largest-known previous IPO allocation, and everything was consolidated into one master spreadsheet. The process gave the syndicate further confidence that demand would be strong, even if market conditions were sour once the deal hit the road. “It was not the amalgamation of six banks’ best friends, which is sometimes what happens,” said a second senior banker on the deal. “There were pre-defined targets, pre-defined qualification and real
