Wall Street banks are preparing to divide up one of the largest fees ever for handling an initial public offering, with the prospect that China's Alibaba, the ecommerce giant, will pay them $400 million or more for its upcoming stock listing.

People close to the process said Alibaba, China's answer to eBay and Google, is likely to pay about 2 per cent of gross proceeds from the IPO to banks – more than the 1.1 per cent Facebook paid in its high-profile IPO but about half the average for a US listing over $1 billion.

With an investor roadshow still months away, valuation estimates remain speculative.

However, these people said they expected that the company would almost certainly raise more than the $16.1 billion Facebook attracted in 2012 and suggested that Alibaba could seek as much as $25 billion from its IPO, making it the largest listing ever.

If Alibaba’s IPO raised $20 billion, fees would amount to $400 million.

The bulk of that would be shared roughly equally by the lead banks on the deal. Those banks are: Credit Suisse, Morgan Stanley, Goldman Sachs, JPMorgan Chase and Deutsche Bank, some of these people have said.

A $400 million payday would rank as the fourth largest ever for banks working on an IPO, according to Dealogic.

Banks underwriting the $19.65 billion Visa stock offering in 2008 were paid a 2.8 per cent fee and took home $533.7 million, the record for a new stock listing, the data provider said.

The lead banks are preparing for a meeting with Alibaba next week where roles and fees are expected to be spelt out, one person added.

The stock offering is expected this summer.

While Alibaba has yet to select a venue for its listing, one person said that it was leaning towards the New York Stock Exchange. – (Copyright The Financial Times Limited 2014)