Alibaba issues more shares to raise $25b in biggest IPO ever

The underwriters of Alibaba Group Holding Ltd's IPO have issued additional shares, bringing the IPO's size to about $25 billion and making it the largest IPO in history, Reuters reported on Monday, citing a source with direct knowledge of the deal.

The IPO surpassed the previous global record set by Agricultural Bank of China Ltd in 2010 when the bank raised $22.1 billion.

On Friday, Alibaba shares soared 38 percent in its first session on the New York Stock Exchange, as investors clamored for a piece of the company, which is a massive bet on China's growing middle class.

Overwhelming demand saw the IPO initially raise $21.8 billion. That prompted underwriters to exercise an option to sell an additional 48 million shares, said a source with direct knowledge of the deal.

The move to exercise what is known as the "green shoe" option as part of Alibaba's IPO was widely expected if its shares performed well in the public market.

Under the option, Alibaba agreed to sell 26.1 million additional shares and Yahoo Inc 18.3 million, netting the two companies an extra $1.8 billion and $1.2 billion respectively.

Alibaba's Jack Ma Yun agreed to sell an extra 2.7 million shares and company co-founder Joe Tsai agreed to sell 902,782 additional shares, according to the prospectus.

The source declined to be identified as the details of the additional sale have yet to be made official. Alibaba declined to comment on the matter.

If the underwriters issue the maximum amount of 48 million additional shares at the offer price of $68 per share, this increases the amount initially raised last week from $21.8 billion to $25 billion.

Citigroup Inc, Credit Suisse Group AG, Deutsche Bank, Goldman Sachs Group Inc, JPMorgan Chase & Co and Morgan Stanley acted as joint book runners of the IPO. Rothschild was hired as Alibaba's independent financial advisor on the deal.

Media said Monday that underwriters of Alibaba's IPO will earn $300 million from the deal.

At its closing share price on Friday, Alibaba has a market value of $231 billion, exceeding the combined market capitalizations of Amazon and eBay, the two leading US e-commerce firms.