HONG KONG (Reuters) – China’s Alibaba Group Holding Ltd plans to raise at least $ 5 billion through the sale of a US dollar-denominated bond this month, according to four people familiar with the matter. issue, amid regulatory control of co-founder Jack Ma’s empire.
According to the investor response, revenue could reach $ 8 billion that the e-commerce leader is likely to use for general corporate spending, one person said.
The fundraiser will be a testament to investor sentiment toward Alibaba, amid regulatory crackdown on it and financial technology subsidiary Ant Group. Chinese officials have been harshly confronted by Ma’s business empire, as he publicly criticized the country’s regulatory system in October, triggering a string of events that led to a halt to the $ 37 billion stock market. of dollars from Ant Group.
Ma’s absence from public view in the intervening moment has fueled social media speculation about his whereabouts.
The bond sale plan, including the schedule, is not finalized and is subject to changes, people said, that were identified as they were not allowed to speak to the media.
Alibaba declined to comment.
Since Ma’s speech, Chinese regulators have launched an antitrust investigation into Alibaba and ordered Fintech Ant to change its lending and other consumer finance businesses, including the creation of a holding company to meet capital requirements.
U.S. President Donald Trump has also raised tensions and banned transactions with eight Chinese software applications, including Ant Group’s Alipay mobile payment application.
Chinese regulators are also reviewing Ant’s equity investments in dozens of companies and are considering whether to instruct the firm to divest some of those investments, Reuters reported.
“Investors will need Jack Ma to make some kind of public appearance to give them confidence so that the bond is well received,” said an Asian credit analyst with a European bank, who was not allowed to speak to the media. and therefore refused to be so. identified.
“Given Alibaba’s current situation, they will have to price it at a premium,” the analyst said. “But in the long run Alibaba is still a company worth investing in.”
Alibaba’s Hong Kong-listed shares rose to 4% on Wednesday, compared with a 0.4% drop in the benchmark. The stock price had fallen 5.6% in the last three sessions.
Last month, Alibaba said it would increase the value of a share repurchase program to $ 6 billion to $ 10 billion.
INCREASE IN THE DEBT MARKET
Alibaba’s international bond offering, if completed, would be the third in the group, according to Refinitiv data. Data shows it sold a US $ 8 billion bond in 2014 and a $ 7 billion stretch in 2017.
With its latest bond sale, Alibaba will join a large number of Asian companies that in recent months have taken advantage of lower borrowing costs and abundant liquidity in global markets.
The companies sold accounted for US $ 363.2 billion worth of bonds in Asia last year, 9% more than a year earlier and the highest value recorded, Dealogic data showed.
The terms of Alibaba’s offer were not immediately known. Two of the people said the tenure is likely to be ten years old and marketing documents are likely to be available as soon as next week.
One of the people involved in the deal said Alibaba wanted to use the broadcast to send a message to the market that “in light of the latest regulatory control, the company is doing well and has the support of some investors “.
LightStream Research analyst Oshadhi Kumarasiri, who publishes on the Smartkarma platform, said that Alibaba has about ten million dollars in the long term worth 10 billion dollars in November, so it makes sense to refinance it, even if time suggests it is about instilling confidence.
“However, I am more pragmatic and would still worry a lot about going for Alibaba with the current regulatory correction.”
Reports from Sumeet Chatterjee, Julie Zhu and Kane Wu; Additional reports by Scott Murdoch and Anshuman Daga; Edited by Christopher Cushing