Alibaba plans to raise HK$80 billion ($10.2 billion) through a Hong Kong share placement, directing all of the proceeds into its AI buildout. The deal would be the largest-ever primary follow-on offering by a Hong Kong-listed company, and it comes a week after Alibaba reported a drop in quarterly profit tied to rising AI spending.
Alibaba said Sunday it plans to sell HK$80 billion ($10.2 billion) worth of shares in a Hong Kong placement to fund its artificial-intelligence push. A deal of that size would mark the largest-ever primary follow-on offering by a Hong Kong-listed company, and the world's third-largest primary follow-on share sale this year after offerings from Alphabet and Intel.
All Proceeds Earmarked for AI
The company said it intends to use 100% of the net proceeds from the placement to invest in its "full stack" artificial intelligence capabilities — a category spanning chips, infrastructure, and the development and deployment of AI models. Alibaba did not reveal further detail on how the money splits across those categories, and it did not comment beyond its regulatory disclosure.
A term sheet reviewed by Reuters showed Alibaba planned to sell 710 million ordinary shares at HK$112.70 apiece. That represents a 3.6% discount to its most recent closing price.
Investors Oversubscribe the Deal
The offering drew strong demand from investors, including from sovereign wealth funds, two people familiar with the matter told Reuters. Alibaba increased the size of the placement after the deal was oversubscribed, the people said. Morgan Stanley, HSBC, UBS and CICC are serving as joint bookrunners of the offering.
Alibaba said the placement was not registered under U.S. securities laws and was structured as an offshore transaction, meaning American investors were not eligible to participate.
AI Spending Follows a Profit Drop
The fundraising follows Alibaba's results for the April-to-June quarter, reported last week, when the company said it had already spent nearly half of its three-year capex investment plan. It said the expected payback on its AI-related investments was on track to fall to 2.5 years from 3 years, driven by surging demand. Alibaba's net profit for the quarter fell 75% from a year earlier as it ramped up AI-related capital expenditures.
A Global AI Spending Race
Since 2022, the global AI boom has fueled heavy capital outlays on infrastructure and data centers in both the U.S. and China. The four major U.S. hyperscalers — Microsoft, Amazon, Alphabet and Meta — are together expected to spend roughly $725 billion in capital expenditures in 2026, much of it tied to AI data centers, chips and cloud infrastructure.
Source: Investing.com
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