The Next Hot Chinese IPO

Chinese equities may have cooled in recent months, but it's a fair bet that one of the next IPOs to spring from the world's most populous nation -- when the market's appetite returns, at least -- will be leading consumer auction site Taobao.

Taobao is owned by Alibaba Group, the same company that took China's leading B2B website Alibaba.com public in China last year. B2B, or business to business, is a big deal in China, with all of the importing and exporting relationships that are crafted.

Taobao may not be as far along as Alibaba.com, but it already has the distinction of being the site that forced eBay (Nasdaq: EBAY  ) to retreat from China.

Alibaba Group CEO Jack Ma claims that there is no time frame in taking Taobao public in the near-term, but the company's commitment to invest aggressively in Taobao -- the U.S. equivalent of roughly $300 million -- hints at an IPO.

Ma claims that Taobao has what it takes to lap eBay and Amazon.com (Nasdaq: AMZN  ) globally in five years, and top Wal-Mart (NYSE: WMT  ) to be the world's largest retail gateway in 10 years.

That's big talk, and a prelude to an IPO if I ever heard one.

One company that would love a Taobao IPO is Yahoo! (Nasdaq: YHOO  ) . The dot-com ragdoll has a roughly 40% stake in Alibaba Group. A well-received Taobao IPO would help prop up Yahoo!'s perceived value and further validate its timely investment.

There's another reason why Alibaba may want to take Taobao public sooner rather than later. China's paid-search leader, Baidu.com (Nasdaq: BIDU  ) , has committed to rolling out a consumer auction site.

It's unlikely to overtake Taobao, but it can't be a coincidence that Taobao's cash infusion to beef up the website's infrastructure comes just as Baidu is looking to sidestep eBay's mistakes.

No matter what Ma may say, I feel that Taobao's IPO will come quickly, once the global markets warm to China's growth story again -- after a certain major international series of sporting events this summer, perhaps?

Related Foolishness:

Wal-Mart Stores is a Motley Fool Inside Value recommendation. Baidu.com is a Motley Fool Rule Breakers selection. eBay and Amazon.com are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarrizis a big believer in China's growth stocks, even with the current lull. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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