You may be familiar with the folk tale – Ali Baba and the Forty Thieves. Well, over the next two weeks the executives of Ali Baba and the investment bankers who manage the IPO are doing their long awaited road show.
Ali Baba is the largest e-commerce company in China. They are going public in September 19.
Remember, while the public loves a seductive IPO, the founders and current shareholders who are selling stock in the IPO are selling to those that purchase the day of the initial public offering (IPO).
Isn’t it fitting that almost 40 investment banks are involved in this enormous offering (you know, the forty thieves). The deal is expected to raise around $21 Billion for Ali Baba. The actual number of investment banks in the deal appears to be 34.
When the largest IPO in history is on the docket, you better believe the large investment banks aren’t going to let anything stand in their way of a payday that is somewhere between $500 Million and $1 Billion in total. Who knows exactly what the negotiated fees are, but will be large nevertheless.
Therefore, unless a black swan event occurs, don’t look for a large market decline over the next two weeks.
It almost seems fitting that the largest IPO in history may mark a top in the stock market, if that should occur. We shall see.
Much more is discussed in today’s video including thoughts on the crude oil and gold markets, as well as some other interesting developments.