Alibaba.com, the mainland's largest business-to-business (B2B) operator, raised its Hong Kong offer price range yesterday after its shares were heavily subscribed by institutional investors.

Its term sheet, released by the company yesterday before its shares are made available to retail investors today, indicated a price range of between HK$12-HK$13.5 per share. The initial range was HK$10-HK$12 a piece.

The institutional tranche of the initial public offering (IPO) was at least 50 times oversubscribed by institutional investors, sources said.

If the mainland's biggest e-commerce portal prices the deal at the revised top end, it could raise $1.49 billion from the IPO, bringing the price-earnings ratio to 106.3 times its 2007 earnings forecast of 622 million yuan.

"It (Alibaba's share price) is certainly not cheap," said Kenny Tang, associate director of Tung Tai Securities. "However, when you look at the NASDAQ, most Chinese Internet companies are already trading at 100 times, so it is still within a reasonable range."

Fellow Internet company Baidu.com, which is listed on the NASDAQ, is trading at 137 times its 2007 earnings forecast.

Tang said relatively low Internet take-up on the mainland offers huge potential for the industry and has fueled hype around Alibaba.com's much-anticipated IPO.

"Alibaba is the largest B2B e-commerce portal on the mainland. Room for organic growth is still enormous. Given the nature of Alibaba's business model that connects business to business, rather than business to consumer, the competition is less intense, allowing a more stable and lucrative income stream," said Tang.

Alibaba.com will begin trading on the Hong Kong stock market on November 6. The company said it will use the bulk of the proceeds from the offering for strategic acquisitions, brand-building and business development to expand its member base.

The Hangzhou-based Internet portal that connects the mainland's small and medium manufacturers to potential buyers worldwide was founded in 1999 by Jack Ma, the non-executive and chairman of the company. He currently owns 189 million shares in the company with a worth of HK$2.55 billion, based on the top indicative price of HK$13.5 per share.

(China Daily October 23, 2007)