Alibaba Announces a $10 Billion Hong Kong Stock Purchase to Fund Investments In AI
Alibaba (9988.HK), a Chinese company, opened a new tab on Sunday and placed HK$80 billion ($10.2 billion) in shares to finance advancements in artificial intelligence.
A purchase by the massive Chinese cloud computing and e-commerce company would be the biggest main follow-on offering by a Hong Kong-listed company in history.
After offers from Alphabet (GOOGL.O) and Intel (INTC.O), it would be the third-largest primary follow-on share sale globally this year.
According to the business, it plans to invest all of the net funds from the placement in its “full stack” AI capabilities, which comprise chips, infrastructure, and the creation and application of AI models.
Alibaba intended to offer 710 million ordinary shares for ¥HK$112.70 each, according to a term sheet examined by Reuters. Compared to its most recent closing price, that was a 3.6% reduction.
Alibaba did not provide further information about its intended AI-related investment intentions per category in its announcement of the $10.2 billion share placement.
Beyond its regulatory disclosure, it remained silent.
When Alibaba released its April-to-June quarter results last week, it revealed that it had already invested almost half of its three-year capital expenditure plan. Due to increased demand, it stated that its anticipated return on AI-related investments was on track to drop from three years to two and a half.
Alibaba increased its capital expenditures related to artificial intelligence, which resulted in a 75% decrease in net profit for the quarter compared to the same period last year.
During an earnings call, CEO Eddie Wu stated, “We first need to make these capex investments to build out the necessary compute capacity in order to be able to capture that future growth.”
Investors, including sovereign wealth funds, have expressed substantial interest in the company’s share offering, two individuals familiar with the transaction told Reuters. Since the material was confidential, they could not be identified.
