(This story has been updated to reflect the release of a statement of support for Alibaba from Yahoo.)
Alibaba Group’s two largest shareholders have joined the debate over the Chinese e-commerce company’s form of corporate governance, which has become a contentious issue as Alibaba decides whether to list its shares in Hong Kong or New York.
Softbank Corp CEO Masayoshi Son said on Friday his company fully supports a partnership system in Alibaba Group, in which Japan-based Softbank holds a 36.7 percentstake. U.S.-based Yahoo, Alibaba’s second-largest shareholder with a 24 percent stake, also issued a statementin favorofthe system.
“Alibaba has built a phenomenal business and created tremendous value for its shareholders over the years,” Son said. “Alibaba’s special culture is at the heart of its success and preserving it will be very important going forward. We are therefore very supportive of the Alibaba partnership structure.”
Alibaba, which is preparing for an initial public offering valued at up to $15 billion, wants the company to be controlled post-IPO by a core group of 28 founders and top managers by giving the group the right to nominate a majority of Alibaba’s board members.
The unusual system is not allowed under Hong Kong stock market regulations. Alibaba officials, who have indicated they would prefer to go public in Hong Kong, have lobbied regulators to make an exception but without success.
The remarks by Son, a world-famous Japanese tech tycoon, came less than 12 hours after Alibaba Group Executive Vice Chairman Joe Tsai published an editorial defending the partnership structure and urging Hong Kong to “adapt to future trends and changes.”
Son’s defense of Alibaba comes in spite of the fact that Softbank’sleverage astop Alibaba shareholder would appear to be weakened by the partnership structure. The partnership group, which includes Alibaba founder and Executive Chairman Jack Ma, collectively owns about 10% of the company, less than one-third of Softbank’s stake.
To read Jack Ma’s explanation of Alibaba partnership, click here.
Yahoo, which like Softbank owns more shares in Alibaba than the partnership group, also came out in favor of the status quo on Friday.
“In a fast-moving technology market, it’s critical that a company’s leadership can continue to preserve its culture and set its strategic course for the future,” said Yahoo Chief Development Officer Jacqueline Reses. “As one of Alibaba’s largest shareholders, Yahoo believes that management’s efforts reflect the desire to govern the company for long-term success while also balancing the rights of shareholders.”
Reses is a member of Alibaba Group’s four-member board, along with Son, Ma and Tsai.
Both Yahoo and Softbank, which invested $20 million in Alibaba in 2000,stand to make billions should Alibaba go public. Based on recent estimates of Alibaba’s expected IPO valuation of about $70 billion, SoftBank’s stake would be worthabout$25 billion, or nearly a third of SoftBank’s current market cap, according to a story in the Wall Street Journal.
