Wheat slid to near the lowest level in four years on expectations that global production will climb to a record. Corn fell for a second day as farmers in the US, the top grower, start to harvest the biggest crop ever.
World wheat output will rise to a record 719.95 million metric tons in 2014-15, while corn production may advance to an all-time high 987.5 million tons, the US Department of Agriculture forecasts. Increasing supplies are helping cut global food prices, with a United Nations’ index slumping to an almost four-year low in August.
At least six big institutional investors are poised to take substantial stakes in Alibaba Group Holding Ltd, people familiar with the matter said.
Fidelity Investments, BlackRock Inc. and T. Rowe Price Group Inc. have asked for some of the largest allocations, and will be among the company’s biggest new shareholders, the people said, asking not to be named because the information is still private. Wellington Management Co. and Putnam Investments LLC have also requested shares in the Chinese Internet giant’s New York IPO, the people said. Waddell & Reed Financial Inc. is also seeking a stake, one person said.
Each of the firms has requested more than $1 billion of shares, one of the people said. Alibaba, which has been marketing the deal since 8 September had received enough interest to sell all of the shares in the offering by the end of last week. Still, people familiar with the matter cautioned that some of this demand was inflated by smaller funds that are placing larger than usual orders as they jockey for a sizable allocation of shares.
Alibaba has made the support of big institutional investors a priority, said people familiar with the company’s plans. The company raised the top end of its fundraising target by only three percent -- less than some of its advisers had proposed, to attract mutual funds who will give it credibility and remain shareholders for the long term, the people said.
The company and its advisers will today determine a final price for the IPO, and the allocation each investor will receive. The sale has the potential to be the largest ever, if Alibaba prices the sale above its $66 to $68 price range, or sells additional shares to underwriters seeking to meet excess demand.
Appealing Valuation
Many investors have been attracted by Alibaba’s valuation, which could come at a discount to peers. Alibaba is seeking a market value of up to $167.6 billion, or 28 times estimates for earnings in the year through March 2015. Analysts expect Alibaba’s net income to rise more than 50 per cent this fiscal year from the previous 12 months.
Larger investors have also weighed risks including a structure that keeps control of the company in the hands of a group of insiders who hold a minority of shares. Like many Chinese companies listed overseas, Alibaba is using a legal arrangement that requires investors buy Alibaba through contracts instead of direct ownership. This so-called variable interest entity has the risk of being altered without the say of investors.
Bob Christie, a spokesman for Alibaba declined to comment as did spokesmen at Wellington, Fidelity, BlackRock and Waddell & Reed. Representatives at T. Rowe and Putnam didn’t immediately reply to requests for comment.
Today, Alibaba completes an investor roadshow that spanned the globe as it sought to drum up demand for the deal. The shares will be listed on the New York Stock Exchange under the symbol BABA and will start trading tomorrow.
Bloomberg News edited by ESM
