Alibaba Group Holding Ltd. is reportedly considering a sale of convertible bonds to raise approximately $5 billion. This move follows a recent $1.75 billion offering by its rival Chinese online retailer, JD.com Inc. The company has reportedly held discussions with investment banks regarding the sale of bonds that can be converted into US-listed stock. The purpose of this potential offering is to fund share repurchases and fuel further growth. Although a final decision has not been made, the offering could take place as early as this week. As a result of this news, Alibaba’s Hong Kong-listed shares experienced a significant drop, reaching a maximum intraday loss since February 8th, at 6.6%.
Alibaba is in need of funds to invest in its key business areas, such as commerce and cloud services. Both of these sectors have experienced a decline in market share due to Chinese regulatory crackdowns and internal conflicts. In order to stay competitive, Alibaba has been reducing prices on its cloud and artificial intelligence services, while also increasing its investments in AI, which is attracting significant global investment.
Requests for comment from Alibaba representatives were unanswered.
Earlier this year, Alibaba expanded its share buyback program by $25 billion, making it one of the largest buyback programs in China.
The company’s American depositary receipts have dropped by 6.6% in the first three days of this week, resulting in a year-to-date gain of 6.7% and a market value of slightly over $200 billion for Alibaba.