On September 11, Alibaba Group (9988.HK) announced its plan to raise approximately $3.2 billion through the issuance of zero-coupon convertible senior notes.
According to the announcement, the net proceeds from the bond issuance will be used for general corporate purposes, with a strategic focus on enhancing cloud infrastructure capabilities and expanding international commerce operations. Specifically, about 80% will be allocated to strengthening cloud infrastructure, including expanding data centers, upgrading technology, and optimizing services to meet growing demand. The remaining 20% will be used to expand international commercial operations, primarily for operational investments aimed at enhancing the company's market position and efficiency.
The senior notes are set to mature on September 15, 2032, at which point they can be converted into Alibaba's U.S.-listed shares. This marks Alibaba's second large-scale fundraising effort for similar objectives this year. In July, the company raised $1.5 billion by issuing zero-coupon exchangeable bonds, with the proceeds similarly directed toward cloud computing infrastructure and supporting international e-commerce operations. In May of last year, Alibaba raised $5 billion through convertible bonds, setting a record at the time for the largest U.S. dollar-denominated bond issuance by an Asian company.
According to Reuters, Alibaba CEO Eddie Yongming Wu revealed during an earnings call that the company had invested 100 billion yuan (approximately $14.04 billion) over the past year in artificial intelligence infrastructure and product research and development. This sustained capital investment underscores Alibaba's strategic determination in these two key areas. In August, Alibaba stated that AI is critical to its expansion in the cloud computing sector, noting that while overall business performance fell short of expectations, cloud computing showed strong quarterly growth.
While securing funds for its long-term strategy, Alibaba has not eased its competitive efforts in existing markets. The day before this fundraising announcement, Alibaba, through its subsidiary Amap, launched a "Street Sweeping List" and invested over 1.1 billion yuan in subsidies, significantly escalating its efforts in the local lifestyle services sector. This move represents a bold assault on the core territories of Meituan and Douyin.
