Alibaba Issues $4.5 Billion of Convertible Bonds to Fund Buybacks

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Alibaba Group Holding Ltd. said Friday it is selling around $4.5 billion worth of convertible bonds to fund share buybacks, as its new leaders clarified their strategy to revive growth at the Chinese e-commerce giant.

In one of the largest such offering in recent years, the Hangzhou-based company priced the seven-year notes, due in 2031, with a coupon rate of 0.5% and a conversion premium of 30%. Part of the proceeds will be used to repurchase approximately 14.8 million of its American depositary shares and to fund future buybacks, the company said in a filing to the Hong Kong stock exchange.

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Alibaba is issuing $4.5 billion in convertible bonds to fund buybacks, priced with a 0.5% coupon rate and a 30% conversion premium.
The company focuses on e-commerce and cloud computing, with an emphasis on AI investment and user retention.
Revenue for fiscal year 2024 rose by 8% to 941.2 billion yuan ($130.4 billion), with Taobao and Tmall sales increasing 5% and cloud revenue up 3%.

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Who’s Who

Alibaba Group Holding Ltd.: Alibaba Group Holding Ltd. is selling $4.5 billion worth of convertible bonds to fund share buybacks, with a focus on e-commerce and cloud computing. Its new leaders prioritize user retention and AI investment. Alibaba's revenue grew by 8% to 941.2 billion yuan in fiscal 2024. The company is restructuring, with plans for IPOs and a cloud computing spinoff currently on hold. Revenue at Taobao and Tmall rose 5%, while its cloud unit grew 3%.

PDD Holdings Inc.: PDD Holdings Inc. is the owner of Temu, a competitor to Alibaba's online marketplaces Taobao and Tmall. The article highlights that Alibaba's Taobao and Tmall have experienced slower growth and lost market share to rivals, including PDD Holdings, amid weak domestic consumption and rising competition.

Baidu Inc.: Baidu Inc. is mentioned as one of Alibaba's rivals in the cloud and AI services sector. Alibaba has been slashing prices on AI services to stem market share losses to competitors, including Baidu.

Tencent Holdings Ltd.: The article mentions Tencent Holdings Ltd. as a competitor to Alibaba in the cloud services market. Specifically, it notes that Alibaba has slashed prices for its AI services to stem market share losses to rivals, including Tencent Holdings Ltd.

Huawei Technologies Co. Ltd.: Huawei Technologies Co. Ltd. is mentioned in the article as a competitor to Alibaba's cloud business. Alibaba has launched a proprietary large language model (LLM), Qwen, and slashed AI service prices by up to 97% to combat market share losses to rivals, including Huawei, as well as Baidu Inc. and Tencent Holdings Ltd.

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