HONG KONG (Reuters) – China’s Alibaba Group Holding Ltd plans to raise at least $ 5 billion this month by selling a US dollar-denominated bond, amid legal investigation into co-founder Jack Ma’s empire.
Depending on the reaction of investors, the return could be $ 8 billion, which the e-commerce leader is likely to use for general corporate spending, one of the people said.
The fundraiser will be a test of investor sentiment towards Alibaba, amid a rule of thumb against the group and the Ant Group subsidiary. Chinese officials slammed Ma’s business empire for publicly criticizing the country’s regulatory system in October for causing a series of events that led to Ant Group’s $ 37 billion IPO.
Mom’s absence from public opinion in the meantime has sparked speculation on social media about his whereabouts.
The people said that the sales plan, including the timeline, had not been finalized and that it was subject to change. They do not want to be identified because they are not authorized to speak to the media.
Alibaba declined to comment.
Since Ma’s speech, Chinese regulators have launched an antitrust inquiry into Alibaba and ordered fintech Ant to change its lending and other consumer finance ventures, including the creation of a holding company to meet capital requirements.
U.S. President Donald Trump also lifted tensions and moved to a ban on transactions with eight Chinese software applications, including the Al-Pay payment program for Ant Group.
Chinese regulators are also investigating Ant’s stock investments in dozens of companies and considering whether they will instruct the company to sell some of the investments, Reuters reported.
“Investors will need Jack Ma to make some sort of public appearance to give confidence that the mortgage can be well received,” a credit analyst in Asia told a European bank, which was not authorized to contact the media not to speak and therefore did not want 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 listed shares in Hong Kong rose to 4% on Wednesday against a 0.4% drop in the benchmark index. The share price has fallen by 5.6% over the past three sessions.
Last month, Alibaba said it would increase the value of a share buyback program to $ 10 billion from $ 6 billion.
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Refinitiv’s data shows that Alibaba’s international bond offering, if finalized, is third. The data showed that it sold an $ 8 billion US dollar bond in 2014 and a $ 7 billion share.
With its latest bond sale, Alibaba will join a number of Asian companies that have been leveraging cheaper borrowing costs and abundant liquidity in world markets over the past few months.
Companies sold in Asia last year had $ 363.2 billion in US dollar bonds, up 9% from a year earlier and, according to Dealogic’s data, the highest value.
The terms of Alibaba’s offer are not immediately known. Two of the people said that the term of office would probably last ten years and that marketing documents would probably only be available next week.
One of those involved in the deal said Alibaba wants to use the issue to send a message to the market that “in light of the latest regulatory inquiry, things are still going well with the investors and the support of some investors.”
Oshadhi Kumarasiri, an analyst at LightStream Research, which publishes on the Smartkarma platform, said Alibaba had about $ 10 billion in long-term debt in November, so it makes sense to refinance it – even if the timing suggests it loses confidence. .
“However, I am more pragmatic and will continue to be concerned about continuing with Alibaba’s current regulatory turmoil.
Reporting by Sumeet Chatterjee, Julie Zhu and Kane Wu; Additional reporting by Scott Murdoch and Anshuman Daga; Edited by Christopher Cushing