HONG KONG (Reuters) – China’s Alibaba Group Holding Ltd plans to raise at least $ 5 billion by selling a US dollar-denominated bond this month, four people with knowledge of the issue said, amid regulatory control of the co-founder’s empire Jack Ma.
Depending on the response of investors, the proceeds could reach $ 8 billion, which the e-commerce leader is likely to use for business overhead, said one of the people.
The fundraiser will be a test of investors’ sentiment towards Alibaba, amid regulatory crackdown on it and the financial technology-affiliated Ant Group. Chinese officials have fallen sharply on Ma’s business empire since he publicly criticized the country’s regulatory system in October, triggering a chain of events that halted the $ 37 billion listing of the Ant Group on the stock market. .
Ma’s absence from public view during the intervention fueled speculation on social media about her place.
The bond sale plan, including the schedule, is not finalized and can be changed, people said, refusing to be identified because they were not allowed to speak to the media.
Alibaba declined to comment.
Since Ma’s speech, Chinese regulators began an antitrust investigation into Alibaba and ordered fintech Ant to change its lending businesses and other consumer finance activities, including the creation of a holding company to meet capital requirements.
US President Donald Trump has also raised tensions, banning transactions with eight Chinese software applications, including the Ant Group Alipay mobile payment application.
Chinese regulators are also looking at Ant’s capital investments in dozens of companies and considering whether to train the company to divest some of those investments, Reuters reported.
“Investors will need Jack Ma to make a 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. with the media and refused to be 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 shares rose to 4% on Wednesday, down from a 0.4% drop in the benchmark. The share price has fallen by 5.6% in the last three sessions.
Last month, Alibaba said it would increase the value of a share buyback program to $ 10 billion from $ 6 billion.
DEPLOYMENT OF THE DEBT MARKET
Alibaba’s international bond offer, if completed, would be the third group, Refinitiv data showed. The data shows that it sold a US $ 8 billion bond in 2014 and a $ 7 billion tranche in 2017.
With the latest bond sale, Alibaba will join a number of Asian companies that have benefited from lower borrowing costs and abundant liquidity in global markets in recent months.
The companies sold had US $ 363.2 billion worth of bonds in Asia last year, up 9% from a year earlier and the highest value, Dealogic said.
The terms of Alibaba’s offer were not immediately known. Two of them said that the term of office could be 10 years and that the marketing documents would probably be available early next week.
One of the people involved in the agreement said that Alibaba wants to use the show to send a message to the market that “in light of the latest regulatory control, the company is still in order and has the support of some investors”.
LightStream Research analyst Oshadhi Kumarasiri, who publishes on the Smartkarma platform, said that Alibaba has long-term debt of about $ 10 billion in November, so it makes sense to refinance it – even if the calendar suggests that it is to inflate trust.
“However, I am more pragmatic and I would still be worried about going a long way on Alibaba with the current regulatory curiosity.”
Reporting by Sumeet Chatterjee, Julie Zhu and Kane Wu; Additional reporting by Scott Murdoch and Anshuman Daga; Edited by Christopher Cushing