Comment on Alibaba IPO Comes With Unusual Structure

Alibaba IPO Comes With Unusual Structure

By Joe McDonalda BEIJING -- Foreigners who want to buy Alibaba Group shares in the Chinese e-commerce giant's U.S. public offering will need to get comfortable with an unusual business structure. Alibaba's online and mobile commerce businesses will be controlled by a "variable interest entity,"aan arrangement meant to allow investors to buy into Internet and other businesses in which Beijing bans or limits foreign ownership. Used since the 1990s by Internet operators such as Baidu and Sina, VIEs are based on contracts that say an offshore entity in the Cayman Islands or another corporate haven will control a Chinese company.

 

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