Alibaba Group, one of China’s largest technology companies, is planning a major move to raise money. The company said on Thursday it wants to gather about HK$12 billion, which equals around $1.53 billion, by selling something called “exchangeable bonds.” These are special types of bonds that investors can later swap for shares in a different company.
In this case, the bonds will be linked to Alibaba Health Technology, another company under the Alibaba umbrella. If investors want, they can exchange the bonds for shares of Alibaba Health in the future. Interestingly, these bonds won’t pay any interest while people hold them. That means bondholders won’t get regular payments like they usually do with other kinds of bonds.
The company owns around 64% of Alibaba Health and says the unit will remain a key part of its business, even if some shares are exchanged through the bond offer.
This fundraising move is happening after Alibaba already sold $5 billion worth of bonds in November 2024. That earlier deal was a mix of currencies and was the biggest bond deal of its kind in the Asia-Pacific region last year.
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Why Alibaba Is Raising Money
Alibaba is widely known for its e-commerce platforms in China. Millions of people use its apps and websites every day to buy products, order food, and pay bills. But now, the company is looking to grow in more areas.
One major focus is its cloud computing services. Cloud computing is like renting computer power and storage over the internet, instead of owning servers. Alibaba wants to improve its cloud systems and also add more artificial intelligence (AI) services. These new services are based on its own AI models, known as Qwen.
Apart from building its technology in China, Alibaba is also spending money to grow outside the country. It recently announced new infrastructure investments in countries like Thailand, Mexico, and South Korea. These investments will help Alibaba serve more businesses and customers around the world.
To fund all these big projects, Alibaba needs a large amount of money. That’s where the exchangeable bonds come in. The company believes this is a good way to raise money while also keeping control of its important health tech business.
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A Trend Among Chinese Tech Firms
Alibaba is not the only Chinese tech company turning to exchangeable or convertible bonds. These types of bonds are becoming popular among companies that want to raise money without giving up too much ownership or control.
For example, in March, another tech company, Baidu, raised $2 billion using similar bonds. Those bonds were tied to shares in Trip.com, a major travel booking site. Earlier in January, budget retailer Miniso raised $550 million through convertible bonds, choosing to use its shares listed in Hong Kong rather than its U.S.-traded ones.
Experts say that many companies are taking advantage of the growing interest in Asia’s debt markets. This is because Chinese policymakers have introduced measures to make borrowing more attractive. With improved conditions, many firms now see this as a good time to raise funds.
In this case, the company made it clear that its health unit is staying a central part of the group, even if some shares are exchanged through the bond sale. The new funding will go straight into expanding cloud infrastructure and boosting global commerce efforts, both of which are key to Alibaba’s future direction.