The Alibaba Group’s upcoming IPO is proceeding smoothly and the demand for its shares is unprecedented, which must be music to the ears of Yahoo! Inc. (NASDAQ:YHOO)’s shareholders. The news on Street is that the bankers handling the Alibaba Group’s IPO are pondering on closing its book early. Yahoo! Inc. (NASDAQ:YHOO) owns around 22.5% stake in the Alibaba Group, which means Yahoo! Inc. (NASDAQ:YHOO)’s shareholders will gain a lot if the Alibaba Group gets a high valuation. If the demand of the Alibaba Group’s share before its IPO is a sign to go by, then it is highly probable that its valuation will shoot up significantly on the day it gets listed. CNBC‘s Kayla Tausche and Jim Cramer recently discussed the demand that the Alibaba Group’s share is witnessing.
“There were headlines this morning that bankers are planning on closing the books early, meaning that investors now have a sooner deadline to actually tell them on how much they actually want to be allocated in this deal. If you had a meeting with the company here in the U.S., you have until Tuesday to place those orders, if you had a meeting with the company or are in the process of having a meeting overseas, that will be Wednesday […],”Tausche said.
Tausche revelaed that nearly 3 dozen institutions have placed their bid for the Alibaba Group’s shares in upwards of $1 billion, which amounts to almost double the value of the $21 billion worth of the Alibaba Group’s shares being offered in the IPO. Cramer explained that because the institutions have placed bids for such large amounts, doesn’t necessarily means that they want that much worth of shares, but instead they have inflated the demand from their side so that they can receive the amount of shares they actually want.
As of June 30, 2014, D.E. Shaw‘s firm D.E. Shaw owns over 16 million shares in Yahoo! Inc. (NASDAQ:YHOO).