Traders work on the floor as they wait for a final price on the Alibaba Group Holding Ltd. initial public offering (IPO) under the ticker "BABA", at the New York Stock Exchange in New York September 19, 2014. Alibaba Group Holding Ltd's shares surged by more than 40 percent in their first day of trading on Friday as investors jumped in to buy what looks likely to be the largest IPO in history.Lucas Jackson/Reuters
Canadian pensioners are making even more money from the initial public offering of Alibaba Group Holding Ltd. than expected, as the Canada Pension Plan Investment Board is said to have added to its holdings in the IPO.
CPPIB had already invested $160-million (U.S.) in the Chinese e-commerce company when it was private. As of Thursday, it was not clear that the pension fund would buy more. However, last minute decisions on pricing, and who would get how much stock, prompted the pension fund to step up.
However, a source with knowledge of the IPO allocation said that the pension fund was given the chance to buy a good-sized chunk of shares at the IPO price of $68 a share, and went ahead with the purchase. As an existing shareholder, CPPIB is the kind of owner Alibaba is targeting. Alibaba wanted to stick with existing shareholders and investors who were unlikely to sell in the short-term.
The new stock is said to be relatively small in comparison with CPPIB's existing stake in Alibaba, which had already soared in value based on the IPO price of $68 a share. Bloomberg has estimated the existing stake was worth about $680-million based on where the IPO priced. Now, based on Friday's trading, CPPIB's investment in Alibaba is up another 32 per cent.
CPPIB spokeswoman Linda Sims declined on Friday to provide an update on CPPIB's holdings.