Alibaba to raise US$3.2bn for cloud and eCommerce expansion

Alibaba Group intends to raise US$3.2 billion by issuing zero-coupon convertible senior notes as part of its strategy to strengthen its cloud and international eCommerce initiatives.

In a stock exchange filing on Thursday (11 September), Alibaba Group said that it will use the net proceeds from the notes offering for general corporate purposes, primarily aimed at enhancing its cloud infrastructure and international commerce operations.

Specifically, the allocation will include around 80% directed towards enhancing its cloud infrastructure, which encompasses scaling up data centers, upgrading technology, and improving services to meet growing demand. The remaining 20% will be invested in expanding international commerce operations, focusing on operational investments that will enable the company to enhance its market presence and efficiency.

Furthermore, the note offering is part of Alibaba Group’s strategy to leverage favourable market conditions and funding costs to optimise its capital structure, according to the filing. Due to the notes’ low all-in cost and zero coupon, the notes offering is expected to lower the company’s overall cost of capital. The capped call transactions are generally expected to reduce the potential dilution to the shareholders of the company。

The US dollar-denominated notes will not pay any interest but will allow bondholders to exchange the notes into US-listed shares of Alibaba. Upon exchange, Alibaba can opt for payment in shares, cash, or a combination of both.

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Alibaba Group has been launching various initiatives to enhance its digital ecosystem and improve user engagement. Most recently, its mapping app Amap has launched an offline dining lifestyle services ranking based on user behaviour, aiming to better meet users' offline consumption needs.

Also known as “Amap Street Stars” (高德掃街榜), the map focuses on dining and food, covering various areas of lifestyle services such as entertainment, transportation, and hotel tourism. It reflects the true popularity of offline businesses, serving as a valuable reference for users when making offline consumption decisions. Currently, the initiative has expanded to over 300 cities in the country, including 1.6 million offline service providers, according to the release. 

Meanwhile, Amap has launched an initiative called "煙火好店支持計劃", aiming to attract an additional 10 million customers daily to offline dining and other service industries by distributing over RMB$1 billion in travel and consumption subsidies.

Guo Ning, chief executive of Amap, believes that enhancing consumer trust will undoubtedly boost consumer confidence, allowing businesses to focus on operations and customers to shop with peace of mind, leading to healthier and more sustainable development in the offline service industry.

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