Chinese e-commerce giant Alibaba announced plans on Thursday to raise $3.2 billion through the sale of a zero-coupon convertible bond, marking the largest deal of its kind this year. The funds are earmarked to accelerate the company’s international expansion and significantly strengthen its cloud computing division. According to a term sheet, the bond will mature in September 2032 and can be converted into U.S.-listed shares at a premium of 27.5% to 32.5% above the current share price.
The company outlined a clear strategy for the proceeds, stating that nearly 80% will be allocated to expanding data centres, upgrading technology, and improving cloud services to meet growing demand. The remaining funds will be invested into enhancing the market presence and operational efficiency of its core e-commerce ventures. This move underscores Alibaba’s heavy investment in artificial intelligence, to which it has pledged 380 billion yuan ($53.37 billion) over three years, viewing AI as a key driver for future cloud revenue growth.
The announcement influenced its stock performance, with its Hong Kong-listed shares reversing early losses to trade up 2.3%. This rally occurred against a backdrop of a strong year for the company’s stock, which is up over 71% year-to-date in both Hong Kong and New York. The convertible bond market in Asia-Pacific has remained robust, with $27.8 billion issued this year, making it a popular tool for companies seeking capital with features that appeal to investors seeking both debt security and potential equity upside.
This fundraising is part of a broader trend of activity from Alibaba and the Hong Kong markets. The company has been an active issuer, raising $1.5 billion via an exchangeable bond in July and $5 billion through a convertible bond last May. On the same day, China Pacific Insurance also announced a similar zero-coupon convertible bond aiming to raise $2 billion, highlighting the continued strength and popularity of these financial instruments in the region’s equity capital markets.
