Investors

The low expectations of many investors in Asia for getting in on Alibaba Group Holding Ltd.’s $25 billion U.S. initial public offering were cemented late Friday when investors in the region learned how few—if any—shares they got in the deal.

A majority of the Chinese e-commerce company’s shares were sold to U.S. investors, the Wall Street Journal reported Friday, citing people involved in the deal. Despite frustration and disappointment in Asia, one investor said the tilt toward large, long-term U.S. investors was consistent with the warnings that bankers were giving to Asian investors at meetings in Hong Kong and Singapore last week.

Jack Ma, center, founder of Alibaba, raises a ceremonial mallet before striking a bell during the companys IPO at the New York Stock Exchange, Friday, Sept. 19, 2014 in New York. Associated Press

Alibaba shares surged 38% in their debut on the New York Stock Exchange Friday, an eye-popping start for an offering of its size, which is now the largest-ever after underwriters exercised an option to sell more shares. The company earlier this year decided to list in New York rather than Hong Kong, a source of much disappointment in the Asian financial hub.

Hong Kong hedge-fund firm Central Asset Investments beat the odds and received shares in the IPO, according to portfolio manager Armand Yeung, who said the firm would be watching to buy more shares now that Alibaba is trading publicly. “Chinese consumption is a secular trend and they are obviously the leader,” Mr. Yeung said. The firm declined to disclose how many shares it received.

Not everyone is feeling left out. Sydney-based investment firm Platinum Asset Management, which manages roughly US$21 billion, was asked by bankers on the deal for its level of interest but didn’t seek shares, according to chief investment officer Andrew Clifford.

“This business is well and truly matured in terms of its level of profitability,” Mr. Clifford said. “There are a lot of other companies in the Internet space that are a lot more appealing.” He cited U.S.-listed Chinese search engine operator Baidu Inc. and Chinese online video company Youku Tudou Inc. as two stocks the firm owns and prefers over Alibaba currently.

US firms had a “first-mover advantage” in getting a place in the listing compared to investors based in Asia, because they have better links with Wall Street brokers and investment banks, said Alan Xi Wang, a Hong Kong-based portfolio manager and head of greater China equity at Principal Global Investors. The US-based asset manager participated in the IPO in the US and obtained shares though not as many as it had hoped for, Mr Wang said, without elaborating.

Retail investors in Hong Kong also have some misgivings about the stock now that it’s trading and they are broadly able to buy it, according to Kenny Wen, a wealth management strategist for Sun Hung Kai Financial. Retail investors in the city that wanted to buy into the Alibaba IPO would have had to meet steep minimum investment requirements in a deal that ultimately was contained to big, institutional buyers. Retail investors received about 10% of the shares sold in the IPO, the Wall Street Journal reported Friday, with the majority reserved for friends, family and employees designated by Alibaba, according to people familiar with the deal.

“Now that they can buy it, the price isn’t attractive anymore,” Mr. Wen said. “The market consensus is now that Alibaba is quite expensive compared to its peers.”

Corrie Driebusch and Juro Osawa contributed to this post.