This article originally appeared in the November 29, 2013 issue of The Pittsburgh Post-Gazette. It is reprinted here with permission. A version of this article also was posted in the December 2013 issue of Financier Worldwide under the title "U.S. Markets Become IPO Venue Of Choice for Non-U.S. Firms."
When China's e-commerce giant Alibaba -- with a valuation that may make it the world's third-largest Internet company behind only Google and Amazon -- made the decision to go public, listing in Hong Kong was its natural first choice.
What is more remarkable, the company has been planning to list in the United States, though details are not yet settled. Its initial public offering, projected to raise more than $10 billion (about six times Twitter's IPO target), would be the largest U.S. IPO since Facebook in May 2012.
For a decade, following the 2002 passage of the Sarbanes-Oxley Act, the business community watched as a growing number of foreign firms fled American capital markets. As one example, German powerhouses Allianz, BASF, Bayer, Daimler, Deutsche Telekom and E.on had de-listed from the NYSE by 2010, leaving only four major firms from Europe's largest economy remaining on the Big Board.
Today, a range of factors, including flexibility in corporate governance (such as a dual-class share structure) and eased requirements for foreign firms, are leading international companies to stage a comeback in U.S. listings. Twenty-eight IPOs here in 2013 have been by foreign companies, including the first Spanish firm to do so since 2004, Abengoa, which now plans to de-list from its home market.
Alibaba, with an 80 percent market share of online shopping in China, is not the first issuer to look elsewhere after first considering Hong Kong. The HKEx's general prohibition on companies with dual-class shares resulted in U.K. soccer club Manchester United -- reportedly the world's most valuable sports team in 2011 -- deciding to list on the NYSE last year.
Despite investor vote disparity in some cases, which U.S. investors have become accustomed to, there are many reasons why foreign firms listing in the U.S. is good for American investors:
Brian Korn and David P. Russo
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