Canada Pension Fund Gets In On Alibaba IPO, To The Tune of $160 Million

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There’s been a huge demand from large investors to get in on the initial public offering of Alibaba Group Holding Ltd., the Chinese e-commerce giant that conducts nearly 80 percent of China’s online commerce.

But the Canada Pension Plan Investment Board (CPPIB) – the entity that invests assets for the Canada Pension Plan – isn’t one of them. That’s because the CPPIB revealed today that it invested in Alibaba years ago.

Reported by Bloomberg:

Canada Pension Plan Investment Board said it has invested $160 million in Alibaba Group Holding Ltd. (BABA), the Chinese e-commerce company that plans to go public tomorrow.

The country’s largest pension fund manager made two direct investments in Alibaba in 2011 and 2012 for a total of $136 million, Linda Sims, a Canada Pension spokeswoman, said in an e-mail.

The pension plan has another $24 million indirect investment through a private-equity fund managed by Silver Lake Management LLC, she said.

What’s the investment worth now? The CPPIB declined to disclose the figures, saying that they won’t release that information until they sell their stake.

But according to some back-of-the-envelope calculations, the initial investment could have ballooned by up to 500 percent. From Bloomberg:

At the time of the initial investment in 2011, the Hangzhou-based Alibaba was valued at about $32 billion, people with knowledge of the matter said at the time. In May 2012, when Yahoo! Inc. sold part of its stake in Alibaba the transaction valued the company at about $35 billion.

Alibaba is expected to price its IPO at between $66 and $68 a share when it debuts on the New York Stock Exchange Friday, valuing the company at about $168 billion.

The estimated five-fold increase in Alibaba’s share price would make Canada Pension’s direct investment worth about $680 million based on the time the investments were made.

The fund manager’s indirect investment in the company is harder to calculate because the fund, Silver Lake Partners III LP, is invested in more than just Alibaba.

Alibaba’s IPO may be the world’s largest ever. The company conducts more transactions than Amazon and EBay – combined.