Alibaba a big source of Bay Area treasure

Repost from SF Gate:

Alibaba wasn’t the only one whose value soared in wake of last week’s IPO.

Start with Silver Lake Partners.

On paper, the tech-focused private-equity firm in Menlo Park made around $5 billion (depending on Alibaba’s stock price on any given day) on its $500 million investment in the globe straddling e-marketplace. That’s in addition to $278.8 million in cash that Silver Lake pocketed when it sold approximately 7 percent of its holdings after Alibaba’s Wall Street debut.

“We described it in the investment committee as a once-in-a-generation investment opportunity,” Silver Lake managing partner and managing director Kenneth Hao told the New York Times.

Alibaba has also supplied plenty of startups with cash, especially companies working on mobile applications.

Among the more recent: $120 million investment in San Francisco mobile game maker Kabam; an undisclosed portion of the $250 million series D round in San Francisco’s Lyft; $125 million investment in Mountain View messaging platform TangoMe; a lead position in a $50 million round for Quixey, a Mountain View app search developer (a Google for apps?), and a reported $10 million in Mountain View’s Peel Technologies, a developer of remote control apps.

“The team has been active over the past several months and we have already completed a few investments in the U.S.,”Joseph Tsai, executive vice chairman of Alibaba, said in October.

In addition, Alibaba invested $206 million in ShopRunner, an upscale competitor to Amazon. It also participated in a $170 million round for Fanatics, an online merchandiser of licensed sportswear.

Snapchat, which was in talks with Alibaba this summer is, at least for the time being, off the list.

“Clearly, Alibaba has had a long-term strategy, establishing a base here and fueling their growth with the IPO,” saidDarlene Chiu Bryant, CEO of ChinaSF, which has brought over more than 40 Chinese companies to San Francisco, providing services that include helping them find office space.

Alibaba’s U.S. investment arm has a particularly salubrious space in San Francisco’s Financial District: the top floor at 140 New Montgomery St., once the Pacific Telephone & Telegraph Co. building, which it moved into last month.

Alibaba boasts two locations in Silicon Valley — an 8,000-square-foot office in Santa Clara and a 25,000-square-foot space in San Mateo, out of which it runs a site called, “an invite-only marketplace connect(ing) shoppers with a hand-selected collection of shops and boutiques carrying items that help express one’s personal style.”

And there’s “rising chatter” that Alibaba is in line to be the anchor tenant of the 17-acre Burlingame Point development, with 700,000 square feet of office space, being purchased by H&Q Asia Pacific in Hong Kong, according to Silicon Valley Business Journal,

We can expect Alibaba, with its size, reach and money, to set about acquiring the kind of space we associate with the Googles, Facebooks, Apples and Oracles of the world.

Win some, lose more: Why are investors beating down Yahoo, which still owns 16.3 percent of Alibaba after taking home $8.3 billion from Alibaba’s IPO?

Two reasons, say analysts. Yahoo sold shares at Alibaba’s offering price of $68, rather than the opening price of $93, which would have netted an additional $3 billion. Second, and more important, the Sunnyvale company’s combined investment in Alibaba and Yahoo Japan is worth almost as much as its core business — i.e. revenue from advertising.

“In other words,” Fortune magazine noted Monday, admittedly before Alibaba started falling from its high and Yahoo began to recover, “Yahoo’s core business turns out to be worth almost nothing.”