Alibaba to raise $3.2 bn via convertible bonds to fuel cloud, global push

The notes will mature in Sept 2032 via private sale to non-US investors; notes carry no interest but can be converted into US-listed shares, cash or a mix

Alibaba Group Holding is planning to raise $3.2 billion by issuing zero-coupon convertible senior notes, the South China Morning Post (SCMP) reported. The funds will support the company’s cloud business and international e-commerce expansion.

 

The notes, which mature on September 15, 2032, will be sold via a private offering to non-US investors. They will not pay interest but allow bondholders to convert the notes into Alibaba’s US-listed shares. Upon conversion, the company can choose to pay in shares, cash, or a mix of both.   

 

Fund allocation: Cloud and global commerce

 

Alibaba said the proceeds will be used as follows:

 

• 80 per cent for cloud infrastructure – including scaling up data centres, upgrading technology, and improving services to meet rising demand

• 20 per cent for international commerce – focusing on operational investments to strengthen market presence and efficiency.

 

Market response

 

Alibaba’s Hong Kong-listed shares rose 0.4 per cent to HK$143.30 on Thursday, even as the Hang Seng Index fell 0.4 per cent. This year, the shares have surged 72 per cent, outpacing the Hang Seng Index’s 30 per cent gain.

 

This offering is part of Alibaba’s ongoing efforts to finance cloud and international e-commerce expansion. In July, the company raised HK$12 billion via exchangeable bonds for similar purposes.

 

Alibaba has invested heavily in artificial intelligence (AI) and cloud infrastructure, building “full-stack AI capabilities”, including its Qwen family of large language models, cloud servers, container services, databases, and developer tools.

 

Alibaba Cloud operates 89 availability zones across 29 regions. In the June quarter, the unit reported 33.4 billion yuan in revenue, a 26 per cent year-on-year rise, outpacing the 18 per cent growth in the previous quarter.

 

Alibaba recently expanded its on-demand delivery services, bringing Tmall merchants onto Taobao Instant Commerce. The campaign, “Jishigou” (instant purchase), includes 260 brands from Tmall. The service aims to fulfill online orders in less than an hour.

 

Alibaba develops new AI chip

 

Amid growing competition in AI, Alibaba has developed a new AI chip, reportedly more versatile than its predecessors. Unlike previous versions fabricated by TSMC, this chip is manufactured in China and designed to handle a wider range of AI inference tasks, The Wall Street Journal reported.