Alibaba Said to Price $4.5 Billion Convertible Bond Sale

(Bloomberg) — Alibaba Group Holding Ltd. has raised $4.5 billion from a convertible bond sale, one of the largest such offerings in recent years, according to people familiar with the matter.

The Hangzhou-based company priced the seven-year bonds, due 2031, with a coupon of 0.5% and a conversion premium of 30%, said the people, who asked not to be identified because the information it’s private. Bond orders were oversubscribed several times over, with demand from investors around the world, one of the people said.

A representative for Alibaba did not immediately respond to a request for comment.

The offering comes as Alibaba needs capital to invest in its core e-commerce and cloud businesses, both of which have lost market share during a crackdown on the sector by Chinese authorities and subsequent internal turmoil. Rival Chinese online retailer Inc. earlier this week sold $1.75 billion in convertible bonds maturing in five years.

Alibaba is looking to strike a balance between returning cash and investing in new and existing businesses, including artificial intelligence, Chairman Joe Tsai and CEO Eddie Wu said in a letter to shareholders on Thursday. The company approved an expansion of a share buyback program earlier this year, adding $25 billion in share buybacks, one of the largest in Chinese history.

The company marketed the convertible bonds with an annual coupon of 0.25% to 0.75% and with a conversion premium of 30% to 35%, according to terms of the deal previously reviewed by Bloomberg News. Alibaba plans to use the proceeds to fund share buybacks, it said in a statement Thursday, confirming a Bloomberg News report.

The offering, which the company said includes a so-called greenshoe option that could increase the size of the deal by $500 million, adds to an already busy month for convertible bond issuance. Globally, $10.2 billion worth of such deals have been made this month, eclipsing April’s $4 billion figure, after a pause in earnings season interrupted a run of more than $10 billion. of dollars months, according to data compiled by Bloomberg.

Part of the proceeds from the offering will be used to repurchase some of Alibaba’s American depositary receipts at the time of pricing, as well as to fund future repurchases. Alibaba ADRs closed down 2.3% at $80.80 on Thursday.

Alibaba did not describe the scope of the share buyback in its statement, but the person familiar with the situation said Alibaba will buy back 14.8 million ADRs, or about $1.2 billion in shares, at the same time as the offering.

Citigroup Inc., JPMorgan Chase & Co., Morgan Stanley, Barclays Plc and HSBC Holdings Plc helped close the deal, according to terms previously seen by Bloomberg News.

–With the help of Shikhar Balwani.

(Updates everywhere).

More stories like this are available on

©2024 Bloomberg LP

You’re at Mint! India’s number one news destination (Source: Press Gazette). To learn more about our trade coverage and market insights Click here!

Related Articles

Back to top button