Alibaba sells shares to generate $10 billion for AI expansion
Alibaba Group Holding Ltd. is aiming to secure approximately HK$80 billion ($10.2 billion) through a share sale, marking its latest effort to vie for global dominance in artificial intelligence. The online retail giant-turned-AI player is offering 710 million shares at HK$112.7 each, according to terms of the deal. That signifies a reduction of 3.6% relative to the closing price of Alibaba’s American depositary receipts on Friday. The placement would represent the largest follow-on offering by a company in Hong Kong’s history, as per data.
It would also represent the largest share sale in the city since 2021, when technology-investment firm Prosus NV divested $14.7 billion in shares of China’s Tencent Holdings Ltd., as per data. The deal emerges as the Chinese company escalates its quarterly capital expenditure to nearly $10 billion, with the objective of fortifying its standing in a highly competitive global AI landscape. It aims to utilise the proceeds to invest in comprehensive AI capabilities, which includes the expansion and enhancement of its infrastructure.
Alibaba will experience a lockup period lasting 90 days. According to the terms, the arrangement of the deal is being facilitated by China International Capital Corp., HSBC Holdings Plc, Morgan Stanley, and UBS Group AG. Hangzhou-based Alibaba’s profit plunged more than 75% for the June quarter to 10.5 billion yuan and it registered a free-cash outflow of 6.6 billion, reflecting the rising cost of AI projects and computing infrastructure.
China’s e-commerce leader this year solidified its position as a global artificial intelligence frontrunner, with its flagship Qwen offering emerging as the world’s most popular model family. Alibaba ranks as one of the largest investors in AI compared to its Chinese competitors. The company, a domestic leader in cloud computing, has been divesting assets and allocating capital toward a range of initiatives, including chips, data centers, and the development of large-language models.
