At present, Masayoshi Son's SoftBank owns 36% of Alibaba, while Yahoo! (YHOO) owns 24%. Those stakes are far larger than the holdings of Ma and his management team.
That ownership table will change if Alibaba goes public, however. The September 2011 agreement with Yahoo! allows Alibaba management to buy half of Yahoo!'s stake when Alibaba conducts an IPO. That will give the management and Ma and additional 12% of the company.
But even still, Ma's share will stay small.
According to these recent reports, Ma likes the idea of being able to create a dual-class share structure, something that's possible in New York. That would allow him to keep effective control over Alibaba as long as he wants, even if his ownership in the company remains small. Zuckerberg and Mark Pincus at Zynga (ZNGA) have used dual-class structures to keep control of their companies.Hong Kong's Exchange does not allow any publicly listed company to have dual-class share structures. None of the Chinese media reports on this issue mention the possibility of Alibaba listing on Nasdaq, even though the same dual-class share structure is possible on that exchange, too. New York appears to be the only option on the table at this point. Alibaba may not necessarily delay its IPO by choosing New York over Hong Kong. I expect the company to eye something like a November IPO date to ensure the good news of its traditionally strong fourth quarter gets discussed during the IPO roadshow. If a November IPO is in the offing for the NYSE, you could expect an S-1 filed from Alibaba any day. Facebook's S-1 was filed in early February 2011. The company held its IPO in the third week of May. Many American investors likely will take some additional comfort if Alibaba trades in New York, because any U.S.-listed firm puts itself under the scrutiny of the Securities and Exchange Commission. After the small-cap Chinese fraud cases of a few years ago, some investors will take a New York listing as a sign that Alibaba is confident in its own numbers and willing to let the SEC pore over them. That's why, on the whole, I would say a New York listing would be a net positive for Alibaba and Yahoo!'s shares. At the time of publication, Jackson held shares of YHOO. Follow @ericjackson This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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