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Alibaba.com Subsidiary One-Touch to IPO in 2014

Securities Times, 12/14/11

Wei Qiang, general manager of Shenzhen One-Touch Enterprise Service, export service provider subsidiary of B2B e-commerce company Alibaba.com (1688.HK), said today that One-Touch plans to IPO in 2014.

In addition to the acquisition agreement One-Touch signed last year with Alibaba.com, Wei said, the company signed a valuation adjustment mechanism (VAM) agreement committing the company to listing in 2014.

A year after its acquisition, One-Touch has reportedly seen threefold increase in operating revenues. Clients have also grown threefold, to 4,200, while the company itself has grown from 150 employees to 400.

According to Wei, One-Touch estimates revenue of USD 3 bln in 2012, and growth to more than 10,000 clients, increasing to USD 15 bln in 2013. Gross profits currently account for 0.8% of revenue, and are expected to grow to 1% with growing revenue, increasing to a possible USD 200-300 mln in net profit by 2013.

One-Touch's profits derive from bulk sales to banking, insurance, and shipping corporations, Wei said, rather than SMEs - for example, by receiving capital from banks based on wholesale prices, and using orders as collateral for credit loans when selling to SMEs. Last year, the Bank of China extended only several tens of millions of RMB in credit to One-Touch; this year, the figure grew to RMB 800 mln.

Editor's Note: A One-Touch senior executive told Ebrun.com that the VAM rumors are inaccurate, saying that although both sides intend for One-Touch to IPO in 2014, Alibaba hasn't set any timetable requirements. The executive added that Alibaba acquired One-Touch as a strategic investment, and that therefore One-Touch must wait two years, or until 2013, to make changes to its shareholder structure according to domestic regulations. While the acquisition agreement calls for One-Touch to eventually list, strictly speaking it is not a VAM, according to the source. For more background on this topic, please see "Rumor: Alibaba to Pay RMB 560 Mln for One-Touch Stake" MD 11/21/10 and "Alibaba.com Acquires Export Service Provider" MD 11/15/10 issues.

Keywords: B2B e-commerce Internet IPO export profit revenue Alibaba.com 1688.HK Wei Qiang One-Touch HR

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