Alibaba roadshow woos U.S. investors

NEW YORK (MarketWatch) — There is mounting enthusiasm in the U.S. for the initial public offering of Chinese e-commerce behemoth Alibaba, a new study shows.

A survey of just over 160 investors who have reviewed Alibaba’s IPO roadshow documents indicated a “remarkable level of enthusiasm,” according to Nicholas Colas, chief market strategist at ConvergEx Group, a provider of brokerage and trading-related services for institutional investors.

ConvergEx interviewed 240 financial professionals from Sept. 9 to Sept. 11, 67% of which were familiar with the roadshow documents. The study reinforces why Alibaba may have raised its IPO price late Monday to a range of $66 to $68 a share from $60 to $66 previously.

Possibly fueling the enthusiasm were comments from Jack Ma, head of the Chinese e-commerce behemoth, who told reporters on Monday in Hong Kong that the company plans to expand aggressively in the U.S. and Europe after its market debut.

Alibaba’s float on the New York Stock Exchange is expected to be the largest in U.S. history, with the company on track to raise some $25 billion.

However, that higher price comes with skepticism regarding the appreciation of its stock price. Some 52% of potential investors and other financial industry professionals surveyed by ConvergEx before the roadshow expected Alibaba shares to appreciate by 10% or more in the first month of trading.

The number fell to 33% after the roadshow, while those expecting the stock to depreciate in its initial month rose by 10 points to 22%.

Interestingly, more than 90% of the 160 potential investors who reviewed the roadshow documents said the content had not changed their minds on whether or not to invest. The number of investors who said they planed to buy rose to 49%, up from 43% in the July survey.

“These are very positive numbers, particularly for an IPO of record-breaking size,” Colas said. “The roadshow did what it was supposed to do, as our survey shows a remarkable level of enthusiasm among financial professionals for this offering.”

But not every financial professional is comfortable with the hype. Other industry professionals have voiced concern about the exorbitant level of enthusiasm.

Darren Heffernan, chief financial officer of Trintech, which provides software that fosters financial transparency to Fortune 500 companies, pointed to Alibaba’s vast challenges, not the least of which being that the company is incorporated in the Cayman Islands and can’t be added to the S&P 500.

“They’ve got a very entrepreneurial leader in Jack Ma, but also a lot of blind faith in what Alibaba is doing as a company,” Heffernan said. “I just don’t know if we know enough about the inner workings to justify that this is a sure thing.”

He predicted a “rocky period” for the company and its share price post IPO.