Alibaba launches USD10bn HK share placement to fund AI spending

Business Recorder reported that China's Alibaba has launched a share placement worth HKD80 billion, or about USD10.2 billion, to finance artificial intelligence development. If completed, the deal would be the largest primary follow-on offering ever by a Hong Kong-listed company and the third-biggest of its kind worldwide this year, behind offerings from Alphabet and Intel.

The company said it will put the full net proceeds into its "full stack" AI capabilities, which span chips, infrastructure, and the building and deployment of AI models. According to a term sheet seen by Reuters, 710 million ordinary shares were to be sold at HKD112.70 each, a 3.6 percent discount to the latest closing price. Alibaba has not disclosed how the funds will be split across those categories.

The placement follows Alibaba's April-to-June quarter results, in which net profit fell 75 percent year on year as AI-related capital spending climbed. The company said it has already spent close to half of its three-year capex plan and is on track to bring the expected payback on AI investments down to 2.5 years from three. Sources told Reuters that the offering has drawn strong interest, including from sovereign wealth funds.