Chinese e-commerce leader Alibaba (9988) said on Thursday it plans to raise US$3.2 billion (HK$24.96 billion) through the sale of a zero-coupon convertible bond to fund international expansion and strengthen cloud computing.
The bond will be the largest of its kind this year, showed Dealogic data, eclipsing DoorDash's US$2.75 billion deal in May.
Alibaba said it would use nearly 80 percent of the proceeds to expand data centres, upgrade technology and improve services to meet demand for cloud computing solutions.
It will invest the remainder in enhancing market presence and improving efficiency in e-commerce ventures.
Alibaba will offer the bond with a 27.5 percent to 32.5 percent conversion premium above its US-listed share price, showed a term sheet seen by Reuters. The bond will mature on September 15, 2032, and convert into US-listed shares.
The firm's Hong Kong-listed shares fell as much as 2.6 percent on Thursday to HK$139.10, outpacing a 0.7 percent decline in the benchmark Hang Seng Index. Its New York-listed stock fell 2.2 percent on Wednesday. Still, the Hong Kong stock has risen 71.6 percent year to date and its US stock is up 71.1 percent.
The technology major is one of China's biggest spenders on artificial intelligence, pledging investment of 380 billion yuan (HK$415.68 billion) over three years.
In reporting quarterly earnings last month, it said AI was key to expanding cloud computing revenue, which grew strongly even as wider operations missed revenue estimates.
"Our investments in AI have begun to yield tangible results," Wu told analysts in an earnings call. "We are seeing an increasingly clear path for AI to drive Alibaba's robust growth."
Alibaba raised US$1.5 billion in July via an exchangeable bond and US$5 billion in May last year through a convertible bond.
On Thursday, China Pacific Insurance (2601) also announced a zero-coupon convertible bond, aiming to raise HK$15.55 billion.
Hong Kong's equity capital markets have been on a tear over the past six months. Convertible bonds have proven particularly popular as they offer the prospect of equity gain with some paying a coupon, and their principal is repaid at maturity if the option to convert into shares is not exercised.
There has been US$27.8 billion worth of convertible bonds issued in the Asia-Pacific region this year, Dealogic data showed, versus US$28.7 billion at the same time last year - the strongest period in three years.
REUTERS
