(Corrects to add dropped word to first paragraph)
(Reuters) – China e-commerce leader Alibaba on Thursday said it plans to raise about $3.2 billion through the sale of a zero-coupon convertible bond to fund international business expansion and to strengthen its cloud computing.
Alibaba, among China’s most aggressive adopters of artificial intelligence, said it would use nearly 80% of the proceeds to expand data centres, upgrade technology and improve services to meet rising demand for cloud computing solutions.
It said it will invest the remaining 20% in enhancing market presence and improving efficiency in global e-commerce ventures.
The senior note will mature on September 15, 2032. The bond will convert into Alibaba’s U.S.-listed shares.
Alibaba raised $1.5 billion in July via an exchangeable bond and $5 billion in May last year through a convertible bond.
The e-commerce firm in August said AI was key to expanding in cloud computing, where it reported strong quarterly growth even as its wider operations missed revenue estimates.
Alibaba has invested 100 billion yuan ($14.04 billion) over the past year in AI infrastructure, product research and development, CEO Eddie Wu said in an earnings call.
On Thursday, China Pacific Insurance also said it would issue a zero-coupon convertible bond, with the goal of raising HK$15.55 billion ($2.00 billion).
Hong Kong’s equity capital markets have been on a hot streak in the past six months. Convertible bonds have proven particularly popular as they offer the prospect of equity gains with some paying a coupon, and their principal is repaid at maturity if the option to convert into shares is not exercised.
($1 = 7.7904 Hong Kong dollars)
($1 = 7.1207 Chinese yuan renminbi)
(Reporting by Scott Murdoch in Sydney; Additional reporting Himanshi Akhand in Bengaluru; Editing by Alan Barona and Christopher Cushing)
