Alibaba Group priced an HK$80 billion share placement, worth about US$10.2 billion, on Sunday, August 23, and said it would direct all net proceeds to artificial intelligence. The Hong Kong transaction gives the Chinese technology company a large new pool of capital for infrastructure and other parts of its AI business as global competition for computing capacity intensifies.
The company said it is placing 710 million newly issued ordinary shares with non-US investors outside the United States at HK$112.70 each. Alibaba expects the placement to close on August 26, subject to customary conditions. Morgan Stanley, HSBC, UBS and China International Capital Corporation are acting as joint bookrunners, according to reporting on the transaction.
Alibaba said 100% of the net proceeds will support its full-stack AI capabilities, including the expansion and improvement of AI infrastructure. That description covers the chain from chips and cloud computing to foundation models and applications, areas in which Alibaba has built its Qwen model family and one of China's largest cloud platforms.
The fundraising follows quarterly results that showed both the opportunity and cost of the strategy. AP reported that April-to-June revenue rose 9% to nearly 269 billion yuan, while revenue from AI cloud and compute services increased 45% to 48.4 billion yuan. Capital expenditure climbed 75% to 67.7 billion yuan, or about US$10 billion, and quarterly profit fell 75% to 10.5 billion yuan.
Alibaba had already announced a plan to invest at least 380 billion yuan, about US$56 billion, in cloud computing and AI infrastructure over three years. It has also set a goal of exceeding US$100 billion in annual AI and cloud revenue within five years. The new equity financing shows that management is prepared to raise outside capital while pursuing those targets and expanding computing supply.
The placement is expected to rank among Hong Kong's largest share sales in recent years and will add pressure to an AI investment race spanning Chinese and US technology groups. Investors will next watch whether the transaction closes as scheduled on August 26 and how quickly Alibaba converts the proceeds into additional data-center capacity, model development and commercial AI services.
Comments