The forthcoming initial public offering for Chinese online conglomerate Alibaba, whch could be as large as $20 billion or more and rival that of Facebook a few years ago, has so far drawn cautiously optimistic views from wealth managers.

As a liquidity event, the IPO will presage the creation of a firm worth as much as a eye-watering $152 billion (source: Reuters), creating a potential $40 billion-plus windfall for its 20,000 employees and hence a bonanza for wealth managers to tap into. The IPO is due to take place in New York rather than closer to home in Hong Kong, a move seen as an attempt to tap the largest equity market, while also causing frowns over whether Hong Kong is competitive enough to host such business.

The business founders Jack Ma and Joseph Tsai are already multi-billionaires and among the richest men in Asia. As with the Facebook IPO, there is also speculation about how many new high net worth and ultra high net worth individuals will be created by the float. A more immediate issue, though, is the likely success of the IPO, given that equity markets have been skittish recently.

“The Alibaba deal may be hard to facilitate in this environment and the filing is putting pressure on the stocks of all global internet companies. This is because the company seems determined to go ahead - it has a high growth rate and good profitability so it compares favourably to other internet companies.  At $20billion, the size is huge,” Walter Price, manager of the RCM Technology Trust, said in a note.

“Alibaba is the latest mega-IPO to come out of China and there are many other companies there that would like to go public in the US because of the long wait and more stringent requirements to list in China. Another company that was trying to beat Alibaba to market was JD, formerly known as 360 Buy, but it has a limited history of profitability and I think it would be hard for that listing to be offered successfully in this environment,” he said.

“So far, the efforts of many Chinese companies to compete outside their home market haven’t been very successful. Baidu has tried in Japan; that has not worked and it is still investing in niche products in Brazil.  Ten Cent is probably the most successful, with about 100 million users for its ‘We Chat’ application outside of China, and its recent adverts in South Africa making fun of Mark Zuckerberg have caused a bit of a stir. With that said, China is the place most likely to challenge the big US internet firms over the long term, in my view,” Price added.

Over at Swiss & Global, the asset manager, one of its senior managers, Jian Shi Cortesi, is upbeat: “The initial public offering of China's e-commerce giant Alibaba will likely be heavily oversubscribed. The IPO gives investors access to one of the best global internet stocks and investor demand will be strong, despite the subdued mood surrounding the technology sector following recent price falls.”

“The IPO strengthens the profile of China's internet sector, particularly among global funds that were not previously invested in this area. Due to the popularity, however, there is justified concern that the price may be set too high and will subsequently fall, as seen with Facebook. In light of the IPO's size, allocation to the technology sector may also shift. Dedicated technology funds are likely to sell other stocks to make space for Alibaba in their portfolios,” she said.

She pointed out that Alibaba generated gross sales of $248 billion in 2013 it dominates the mobile retail space with a market share of 76.2 per cent.

There are potential worries, she added: “Despite Alibaba’s strong market position, it faces sizeable challenges. Competition has increased considerably and there are concerns that its income growth may slow. Potential legal changes in China present a further hurdle. The threat of tighter regulation for online payment systems may jeopardise Alibaba's mobile payment plans, for example the Chinese government has banned virtual credit cards until further notice. In addition, the Alibaba Group is controlled by a partnership consisting of 28 people, who appoint the majority of the members of its Board of Directors. This form of corporate management will limit shareholders' options to influence the development of the company.”

In a piece of analysis by Bloomberg, the news service said the 10 biggest Chinese companies that completed initial public offerings in the US in the past 12 months have returned an average of 44 per cent since their offer dates, compared with 25 per cent for all US IPOs of more than $100 million in the same period.