Opinion | Open sesame may not work this time

Tough market conditions and saga leading to buyout of trading unit likely to see investors give second thoughts about Alibaba's stock offering

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Alibaba's offering may not be hot amid the market conditions.

Published: 12:00am, 2 Sep 2013Updated: 4:45am, 2 Sep 2013

Mainland internet giant Alibaba Group, which listed and then privatised its online trading subsidiary Alibaba.com has gained a reputation among some investors - if not an adoring public - for controversial corporate practices.

With the charismatic entrepreneur Jack Ma Yun at the helm, the high-flying group has become a household name in the country, and now operates a number of fast-growing firms and owns significant market shares in almost every sector of the world's largest internet market on the mainland.

They range from the popular consumer-to-consumer site Taobao to the payment system Alipay, a version of PayPal.

However, savvy investors may look at Alibaba's latest capital-raising plans differently after the painful and expensive lessons learned from the listing of Alibaba.com in 2007 and its subsequent privatisation last year.

The fundamentals of the group may be sound, but after that bruising experience, can investors trust the management to deliver a good deal?

Many investors will not be able to forget the events that followed the resignations of Alibaba.com's long-time chief executive David Wei Zhe and chief operating officer Elvis Lee Shi-huei in February 2011.

Their departures came after the company said an internal investigation found that 100 sales officers helped perpetrate a fraud by allowing fake companies on the mainland to register and sell products on the e-commerce site. It also said more than 2,000 of its "gold suppliers" - companies authenticated by Alibaba - had scammed international buyers.

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Tough market conditions and saga leading to buyout of trading unit likely to see investors give second thoughts about Alibaba's stock offering

Tough market conditions and saga leading to buyout of trading unit likely to see investors give second thoughts about Alibaba's stock offering