Alibaba launched an HKD 80 billion (USD 10.2 billion) share placement to fund its growing artificial intelligence ambitions. This makes it the largest primary follow-on share sale by a Hong Kong-listed company. The deal also ranks third globally this year after offerings from Alphabet and Intel. The Chinese e-commerce and cloud computing giant plans to use all net proceeds for its full-stack AI operations.
The investment will cover AI chips, computing infrastructure and the development and deployment of AI models. Alibaba is selling 710 million new shares at HKD112.70 each. The transaction represents an 8.4% discount to the company’s latest Hong Kong closing price and accounts for 3.6% of its enlarged share capital.
The offering drew strong demand from investors, including sovereign wealth funds and long-only institutions. The order book reached about USD 28 billion, nearly three times the amount being raised, according to people familiar with the transaction. The strong response allowed Alibaba to increase the size of the placement. Morgan Stanley, HSBC, UBS and CICC are serving as joint bookrunners for the deal.
The placement was structured as an offshore transaction and was not registered under US securities laws, meaning US investors were excluded. Alibaba’s fundraising comes shortly after a sharp increase in its AI spending. The company’s capital expenditure rose 75% year-on-year to 67.68 billion Yuan in the April-June quarter. Its quarterly net profit fell 75% as spending on AI infrastructure and related technology increased.
Alibaba has already used nearly half of its planned 380 Billion Yuan (USD 56.5 Billion) investment for AI and related infrastructure through 2029. The company expects AI investment to break even within three years, with the timeline potentially shortening to 2.5 years as demand grows. The company is also increasing its use of proprietary chips in its data centers. Alibaba expects these chips to improve margins and reduce reliance on commercially purchased hardware.
The fundraising shows the wider global race to build AI infrastructure. Major technology companies in the US and China are committing vast sums to chips, data centres and computing capacity as demand for AI services continues to rise.
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