Alibaba Group Holding Ltd. is looking to raise about HK$80 billion, which translates to roughly $10.2 billion, through a major share sale. The move is designed to support the Hangzhou-based company's ongoing push into global artificial intelligence markets and infrastructure.
According to the terms of the transaction, the online retail and cloud computing company is offering 710 million shares at HK$112.7 each. This pricing reflects a discount of 3.6 percent compared to the closing price of Alibaba's American depositary receipts.
Market data indicates that this placement stands as Hong Kong's largest follow-on offering on record. It also marks the city's largest share sale since 2021, when Prosus NV sold $14.7 billion in shares of Tencent Holdings Ltd.
The capital raise coincides with Alibaba increasing its quarterly capital spending to nearly $10 billion. The company intends to channel the proceeds into full-stack AI capabilities, which includes the expansion and enhancement of its underlying infrastructure to maintain a competitive edge in the global AI sector.
Under the terms of the deal, Alibaba will be bound by a 90-day lockup period. The offering is being arranged by China International Capital Corp., HSBC Holdings Plc, Morgan Stanley, and UBS Group AG.
Financial reports for the June quarter show that Alibaba's profit declined by more than 75 percent to 10.5 billion yuan, or about $1.6 billion. The company also reported a free-cash outflow of $6.6 billion, highlighting the substantial financial weight of ongoing AI projects and computing infrastructure development.
Earlier this year, Alibaba solidified its position as a major artificial intelligence player after its flagship Qwen model family gained widespread popularity. Among its Chinese competitors, Alibaba remains one of the largest investors in AI, allocating capital across chips, data centers, and large-language model development while simultaneously hiving off non-core assets.
"Alibaba's massive $10.2 billion share sale highlights the immense capital intensity required to remain competitive in the current artificial intelligence landscape. With quarterly capital expenditures reaching nearly $10 billion and a notable dip in recent quarterly profits and free cash flow, the company is making a clear, high-stakes bet on future returns from cloud computing and large-language models. For entrepreneurs and businesses, this serves as a reminder that scaling deep-tech and AI infrastructure demands heavy, sustained financial commitment well before profitability stabilizes." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
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