Alibaba Targets Raising $10 Billion to Fund AI

Bloomberg – Alibaba Group Holding is seeking to raise approximately HK$80 billion ($10.2 billion) through a share sale, in its latest move to compete for global leadership in artificial intelligence (AI).

The online retail giant, which has transformed into a key player in the AI sector, is offering 710 million shares at HK$112.7 per share, representing a 3.6% discount to the closing price of Alibaba’s American Depositary Receipts (ADRs) on Friday.

The offering will be the largest subsequent public offering by a company in Hong Kong ever. It will also be the largest share sale in the city since 2021, when the technology investment firm Prosus sold shares worth $14.7 billion in Chinese tech giant Tencent Holdings.

The deal comes as the Chinese company is raising its quarterly capital expenditure to nearly $10 billion, aiming to safeguard its position in the fiercely competitive global AI arena. Alibaba intends to use the proceeds from the offering to invest in integrated AI capabilities, including expanding and enhancing its infrastructure.

Profits at Alibaba, which is headquartered in Hangzhou, fell by more than 75% in the quarter ended in June to 10.5 billion yuan ($1.6 billion), while free cash flow turned negative at $6.6 billion, reflecting the rising costs of AI projects and computing infrastructure.

Alibaba is among the largest spenders on AI compared to its Chinese competitors. The company, a local leader in cloud computing, is divesting some of its assets and directing capital toward areas ranging from chips and data centers to the development of large language models.