The Canada Pension Plan Investment Board is set to harvest a huge return as its first direct investment in China is about to launch an initial public offering in North America.
According to various reports the national pension fund will enjoy huge returns from investments made years ago in the massive Chinese e-commerce site, Alibaba. The company is set to go public this August. In 2011 the CPPIB invested in Alibaba though a $100 million direct investment and a C$465 million commitment to a fund invested in the company. The investments seem set to pay off handsomely.
Alibaba has become the key web portal connecting retailers in the west with Chinese manufactures. The company’s business is booming resulting in the value of the company expanding by a factor of five in less than three years according to Bloomberg. Alibaba is now estimated to be worth $168 billion. The speculation is that CPPIB's direct investment could be worth as much as $525 million.
“Since we own a stake in Alibaba, I hope it prices very high,” CPPIB CEO Mark Wiseman was quoted as saying.
Alibaba filed for a U.S. IPO early in May. The offering could raise much as $20 billion making it even larger than the 2008 offering by Visa Inc. The one worry: The company will have to keep a lid on copyright violations. The Alibaba website has often been a conduit for fake products and brand knock-offs. The company has been on the Office of the U.S. Trade Representative's "Notorious Market" list. Being on the list mean`t the company could not take its shares public in the U.S. Albibaba got off the list in 2012.