The proceeds will be spent on various purposes, including scaling up its data centres, upgrading technology and expanding international commerce operations
[NEW YORK] Alibaba Group Holding is leading a fundraising spree among Chinese tech giants, driven by soaring capital demands amid intensifying competition in artificial intelligence.
The company raised about US$3.2 billion in the year’s biggest offering of convertible notes so far, according to data compiled by Bloomberg. The Chinese e-commerce company’s zero coupon notes due 2032 will convert into its American depositary receipts, according to terms of the deal seen by Bloomberg News.
Alibaba priced the bond at a 31.25 per cent conversion premium, according to a statement on Thursday (Sep 11) confirming an earlier Bloomberg News report. Investors had expressed interest several times the offering size, people familiar with the matter said, asking not to be identified as the information isn’t public.
Shares rose 0.4 per cent to close at HK$143.30 on Thursday in Hong Kong. The company’s ADRs were up 2.9 per cent to US$148.11 each in pre-market US trading as of 9:23 am
The huge appetite for cash among Chinese tech giants is a sign of the bruising competition in the sector, where companies are piling billions of US dollars into cloud computing, AI, and even food delivery.
Earlier this week, another Chinese tech giant Baidu raised 4.4 billion yuan (S$792 million) from a dim sum bond offering, following a 10 billion yuan issuance in March. Tencent Holdings is considering its first public debt offering in four years with a sale of offshore yuan bonds as early as this month. Meituan is also exploring a potential dim sum bond offering.
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The proceeds from Alibaba’s convertible bonds will be spent on various purposes, including scaling up its data centres, upgrading technology and expanding international commerce operations, the terms show. The Hangzhou-based company said earlier this year it will spend US$53 billion over three years on AI infrastructure such as data centres in an ambitious bid to become a leader in artificial intelligence.
Alibaba did not respond to a request for comment.
“Alibaba is playing a long game – raising cheap capital, hedging dilution, and doubling down on growth,” said Ravi Wong, first vice-president at Yan Yun Family Office (HK). “It’s worth watching how these investments translate into revenue acceleration.”
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The company is in fierce competition for Chinese consumers, pitting it against rivals including Meituan and JD.com Earlier this week, Alibaba committed another one billion yuan of incentives to drive more traffic to one of its most popular online services.
The sector’s capital-raising moves also underscore the already white-hot global AI race that is further intensifying. Nvidia’s chip production partner Taiwan Semiconductor Manufacturing Co reported healthy sales growth in August earlier this week, while Oracle provided an aggressive outlook for its cloud business. Last week, Broadcom’s stock also soared after news emerged that it secured a massive order with OpenAI totaling more than US$10 billion.
“Optimism that rising AI demand will lead to meaningful earnings upside at China’s cloud computing companies remains misplaced,” Robert Lea, an analyst at Bloomberg Intelligence, said. “We consequently expect the price war and surging energy costs to keep China’s fragmented cloud sector in the red for the next three years.”
Asian sales of bonds that can turn into shares have soared in 2025 and are heading towards multiyear highs. The instrument offers a cheaper way to raise cash than traditional debt, especially as interest rates are elevated and rallying stocks create the right conditions for this corner of the market to thrive.
China Pacific Insurance (Group), also tapped the convertible bond market by raising HK$15.6 billion (S$2.6 billion) from the instrument.
Alibaba raised US$5 billion in convertible bonds last year, a record US dollar-denominated issue by an Asian company at the time. In July, it raised HK$12 billion from the sale of bonds exchangeable into shares of a unit, Alibaba Health Information Technology.
Alibaba’s latest note comes with a lock-up on the issuer for 90 days from the pricing date.
The fundraising boom is also becoming a bonanza for investment bankers.
Barclays, Citigroup, HSBC Holdings, JPMorgan Chase, Morgan Stanley and UBS Group worked on the latest Alibaba offering. BNP Paribas, Deutsche Bank and Mizuho Securities also helped, according to terms of the deal seen by Bloomberg. BLOOMBERG
