Impact of dual-class share structure: Alibaba IPO success analysis

Figures & data

Table 1. Major events of Alibaba’s development.

1999	Alibaba secured its first US$ 5 million angel investment, led by Goldman Sachs, from leading fund companies in the US, Asia and Europe
2000	SoftBank Group invested US$ 20 million in Alibaba
2003	Taobao.com officially established
2004	Launched the third-party online payment platform Alipay; this raised US$ 82 million from SoftBank, Fidelity and other venture capitalists, of which SoftBank contributed US$ 60 million
2005	Acquired all assets of Yahoo! China, received US$ 1 billion investment from Yahoo! and took over Yahoo! China
2007	Ali Software formally established to provide online software services for small and medium-sized enterprises; Alibaba listed on the Hong Kong Stock Exchange; establishment of an online advertising platform, Ali Mom
2008	Launched Taobao Mall; integrated Yahoo! China and a word-of-mouth network to establish Yahoo! as a word-of-mouth company; Taobao and Ali Mom merged development
2009	Merger of Ali Software and Ali Research and Development Institute into Ali Software; open net of public praise; Yahoo! China infused taobao.com; establishment of Ali Cloud to calculate
2010	Launched Juhuasuan, AliExpress and the mobile Taobao client; established the partnership system; acquisition of export services provider Datong
2011	Juhuasuan.com spun off from Taobao to become an independent platform
2012	Delisted from the Hong Kong Stock Exchange; adjustments to the organizational structure, adjustments of subsidiaries into seven business groups; Taobao Mall renamed
2013	Ali Cloud and Wanwang merged into the new Ali Cloud Company; establishment of 25 business units
2014	Launch of Tmall International; Ant Financial officially established; Alibaba listed on the New York Stock Exchange with a market value of US$ 231.4 billion, becoming the second largest Internet company after Google
2015	Investment in Meizu Technology; completion of restructuring with Ant Financial, announcement of Ant Financial as the parent company of Alipay
2016	Signed strategic agreements with Unilever, Suning and Metro; signed Youku Tudou acquisition agreement
2019	Listed on the Hong Kong Stock Exchange

Data source: Alibaba’s official website and Internet data.

Table 2. Changes in Alibaba’s equity structure before and after listing.

Holding party	SoftBank	Yahoo!	Ma Yun	J. Tsai	Other
Equity structure in 2013	31.90%	24%	7.43%	2.15%	34.52%
Pre-listing Equity Structure (2014)	34.40%	23%	8.90%	3.60%	30.50%
Post-listing Equity Structure (2014)	32.40%	16%	7.80%	3.20%	40.30%

Data source: Alibaba’s official website.

Table 3. The specific content of the Alibaba partnership system.

Project	Content
Recognition of partners	Hard requirements: new partners must have worked in Alibaba or affiliated companies for more than five years. They must own a certain percentage of the company’s stock and sell no more than 40% of the shares they held when they took office. Three-quarters of the current partners voted. Soft qualifications: positive contribution to company development. Highly committed to the company culture and willing to do one’s best to contribute to the company’s mission, vision and values as a partner.
Rights and obligations of partners	This power includes the right to nominate directors and the right to distribute bonuses. Partners will do their best to enhance Alibaba’s ecosystem vision, mission and value.
Basic information about partners	There are 38 members in total, and 90% of the partners have been with Alibaba for more than 10 years.
Classification of partners	The partners are divided into permanent partners, general partners and honorary partners. At this stage, Ma Yun and Joseph Tsai are permanent partners and all other partners are general partners. Honorary partners are elected from retired partners. Honorary partners do not participate in the management of the company, but enjoy the right to receive dividends from the bonus pool.
Withdrawal of partner	Physiological mechanism: voluntary retirement of partners (except permanent partners) after reaching the age of 60 or incapacity (including death). Voluntary mechanism: resignation or voluntary expulsion. Removal mechanism: any partner can be removed by partner vote (more than 50% affirmative vote).

Data source: Alibaba’s official website.

Table 4. Main venture investment history of Alibaba.

Investment stage	Year	Financing amount	Venture capital institution
First round	1999	US$ 5 million	Goldman Sachs, Delta Asia, Singapore Technology Development Fund, Investor AB, Fidelity
Second round	2000	US$ 25 million	SoftBank, Fidelity, Asia Capital, Sweden Investment, Japan Asia Investment, TDF
Third round	2004	US$ 82 million	SoftBank, Worldwide Investments, Fidelity Investments and TDF
Fourth round	2005	US$ 1.07 billion (including all of Yahoo! China’s assets, then valued at about US$ 70 million)	Yahoo!

Data source: Alibaba’s official website.

Table 5. Ma Yun’s personal development.

Year	Main experience
1988–1995	Lecturer in English and International Trade at Hangzhou Electronic Engineering Institute.
1995–1997	Founded ‘China Yellow Pages’, China’s first Internet commercial information publishing site.
1997–1999	Joined the moFTEC China International E-commerce Centre to develop the moFTEC official website and the online Chinese commodity trading market.
1999	Set up a research and development centre in Hangzhou, with Hong Kong as its headquarters, and set up the Alibaba website.
2000	Appeared on the cover of Forbes magazine.
2003	Entering the C2C field, Ma launched Taobao.com, a personal online trading platform, which grew into the largest personal auction website in China within two years. In the same year, he entered the field of electronic payment, established Alipay, and launched an independent third-party electronic payment platform, which developed rapidly.
2004	Founded Alipay, a third-party online payment platform.
2008	Alibaba Co., Ltd. and Hangzhou Normal University jointly set up Hangzhou Normal University Alibaba Business School; Ma served as the chairman.
2009	Joined TNC China Board.
2010	Joined the Nature Conservancy’s (TNC) global board of directors.
2014	Alibaba Group was officially listed on the New York Stock Exchange.

Data source: Alibaba’s official website.

Table 6. Members of Alibaba’s board.

Name	Position	Professional competence
Ma Yun	Chairman of the Board (former)	Rich management experience and unique strategic vision
Zhang Yong	Chairman of the Board and Chief Executive Officer	One of the founders of Alibaba, specializing in law and finance
Cai Chongxin	Executive Vice President	Law and finance
Maggie Wu	Director and Chief Financial Officer	Financial matters
J. Michael Evans	Director and President	Investment and capital operation
Kabir Misra	Director	Investment and capital operation
Tung Chee-hwa	Independent Director	International trade
Walter Kwauk	Independent Director	Financial matters
Jerry Yang	Independent Director	Investment and capital operation
E. Borje Ekholm	Independent Director	Financial management and strategic investment
Wan Ling Martello	Independent Director	Marketing

Data source: Alibaba’s official website.

Figure 1. Analysis of Alibaba’s return on equity (%).

Data source: WIND Database

Table 7. Profitability analysis of Alibaba.

Company	Indicator	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
BABA	ROE	20.2	38.1	90.4	24.4	34.5	14.8	17.4	16.2	19.6	15.9
AMZN		−0.5	3.1	−2.4	4.9	14.5	12.9	28.3	21.9	27.4	28.8
BABA	ROA	13.5	15.5	26.7	13.2	22.7	9.8	10.8	10.2	12.9	10.4
AMZN		−0.1	0.8	−0.5	1	3.2	2.8	6.9	6	7.8	9
BABA	EPS	0.29	0.57	1.62	1.56	4.29	2.46	3.88	4.97	7.97	8.4
AMZN		−0.01	0.03	−0.03	0.06	0.25	0.31	1.01	1.15	2.09	3.24

Data source: WIND Database.

Figure 2. Analysis of Alibaba’s return on assets (%).

Data source: WIND Database

Figure 3. Earnings per share analysis of Alibaba.

Data source: WIND Database

Figure 4. Analysis of Alibaba’s operating profit growth rate (%).

Data source: WIND Database

Figure 5. Analysis of Alibaba’s net asset growth rate (%).

Data source: WIND Database

Figure 6. Analysis of Alibaba’s cash flow ratio (%).

Data source: WIND Database

Figure 7. Alibaba’s free cash flow analysis.

Data source: WIND Database

Figure 8. Analysis of Alibaba’s current ratio (%).

Data source: WIND Database

Figure 9. Analysis of Alibaba’s quick ratio (%).

Data source: WIND Database