Alibaba announces $10.2 billion Hong Kong share placement for AI
This digest was compiled by AI from multiple sources — links to the originals are below.
Alibaba said on Sunday it plans to sell HK$80 billion ($10.2 billion) in a share placement to fund artificial intelligence-related development. The deal would mark the largest-ever primary follow-on offering by a Hong Kong-listed company. The company said it intends to use 100% of the net proceeds to invest in its "full stack" AI capabilities.
Key Facts
- Alibaba plans to sell 710 million ordinary shares at HK$112.70 per share, a 3.6% discount to its most recent closing price.
- The offering would be the largest-ever primary follow-on by a Hong Kong-listed company and the world's third-largest this year after Alphabet and Intel.
- Alibaba's net profit for the April-to-June quarter fell 75% year-on-year as it ramped up AI-related capital expenditures.
- Morgan Stanley, HSBC, UBS and CICC are serving as joint bookrunners for the offering.
Placement Details
A term sheet reviewed by Reuters showed Alibaba planned to sell 710 million ordinary shares at HK$112.70 a share. That represented a 3.6% discount to its most recent closing price. The share placement was not registered under U.S. securities laws as an offshore transaction, meaning American investors were not eligible to participate, Alibaba said.
AI Investment Strategy
The company said it intends to use 100% of the net proceeds from the placement to invest in its "full stack" AI capabilities, a category that includes chips, infrastructure and the development and deployment of AI models. In its announcement, Alibaba did not reveal additional details on its investment plans by category of its planned AI-related investment. Last week, Alibaba reported its results for the April-to-June quarter, saying it had already spent nearly half of its three-year capex investment plan. It said its expected payback on AI-related investments was on track to fall to 2.5 years from 3 years, driven by surging demand. CEO Eddie Wu said on an earnings call, "In order to be able to capture that future growth, we first need to make these capex investments to build out the necessary compute capacity."
Investor Demand
The company's share offering has been met with strong demand from investors, including sovereign wealth funds, two people familiar with the deal told Reuters. Alibaba increased the size of the offering after the deal was oversubscribed, the people familiar with the matter said. Morgan Stanley, HSBC, UBS and CICC are serving as joint bookrunners of the Alibaba offering, said one of the sources and a third person with knowledge of the matter.
4 sources
Alibaba announces $10.2 billion Hong Kong share placement for AI
