Alibaba Group Holding Limited (NYSE:BABA) (OTC:BABAF) announced the pricing of HK$12.023 billion ($1.5 billion) in zero-coupon exchangeable bonds due 2032, marking the Chinese e-commerce giant’s latest move to fuel its artificial intelligence and cloud expansion strategy.
What Happened: The bonds, priced on Thursday, are exchangeable for shares of Alibaba Health Information Technology Limited (OTC:ALBBY), a consolidated subsidiary where Alibaba holds approximately 64% equity interest. The offering is expected to close July 9, subject to customary closing conditions.
Bondholders can exchange their securities at an initial ratio of approximately 160,513.6 Alibaba Health shares per HK$1 million principal amount, equivalent to an initial exchange price of HK$6.23 per share. This represents a 48% premium over the HK$4.21 per share price in the concurrent delta placement.
If fully exchanged, the bonds would represent up to 12% of Alibaba Health’s issued share capital as of May 31. The exchange price is subject to customary adjustments and anti-dilution provisions.
Alibaba expects net proceeds of approximately HK$11.9 billion ($1.55 billion) after deducting underwriter commissions and estimated expenses. The company plans to use proceeds for general corporate purposes, including investments in cloud infrastructure and international commerce businesses.
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Why It Matters: The bond offering comes as Alibaba shares have surged 28% year-to-date, significantly outperforming the NYSE Composite’s 8% gain. The rally has been driven by accelerating growth in the company’s Cloud Intelligence Group, particularly AI-related products, and strategic investments in artificial intelligence.
In June, Alibaba released updated Qwen3 AI models and partnered with Apple Inc. (NASDAQ:AAPL) to deploy machine-learning features on devices in China. The company is aggressively expanding its global cloud presence with new data centers in Malaysia, South Korea, and the Philippines.
The bonds will be listed on the Vienna MTF operated by the Vienna Stock Exchange within 60 days after closing. Bondholders may require redemption on July 9, 2030, or following certain corporate events, with redemption at 100% of the principal amount.
Price Action: As of Friday at 1:13 p.m. local time, Alibaba Group Holding Ltd traded at HK$105.60 (~$13.45) on the Hong Kong Exchange, down 0.56%.
On the NYSE, Alibaba ADR closed Thursday at $108.70, down 1.82%, with after-hours trading slipping to $108.63.
BABA scores well on momentum and growth based on Benzinga’s Stock Edge Ranking. While the stock shows a negative short- and medium-term price trend, its long-term trend remains positive. Click here for a full stock breakdown and to compare it with rival stocks.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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