China’s Internet Giants Lead the Way Raising $6.5 Billion Through Convertible Bonds

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Both Alibaba and JD.com said proceeds from the convertible bond offerings will be used for share buybacks.

More Chinese technology companies might turn to convertible bonds after Alibaba Group Holding Ltd. and JD.com Inc. raised a combined $6.5 billion through such notes, said UBS, the joint book runner for JD.com’s issuance.

Both enterprises said the proceeds will be used for share buybacks, which are expected to boost their stock prices and show some positive signs in the capital market for other Chinese tech companies, Selina Cheung, co-head of UBS Asia equity capital markets, said Tuesday.

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Alibaba and JD.com raised a combined $6.5 billion through convertible bonds for share buybacks, influencing other Chinese tech firms to consider similar financing.
JD.com completed a $2 billion convertible note issuance at a 0.25% interest rate, maturing in 2029, to repurchase ADSs and expand international operations.
Alibaba priced a $4.5 billion convertible notes offering at a 0.50% interest rate, due 2031, for share buybacks, with a conversion price 30% higher than its current stock price.

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Who’s Who

Alibaba Group Holding Ltd.: Alibaba Group Holding Ltd. priced a $4.5 billion offering of 0.50% convertible senior notes due in 2031, aimed at qualified institutional buyers. The initial conversion rate is 9.5202 ADSs per $1,000 principal amount, equivalent to $105.04 per ADS, about 30% above its recent price of $80.80. Alibaba plans to use the proceeds to repurchase 14.8 million ADSs at $80.80 per ADS and for future share repurchases.

JD.com Inc.: JD.com Inc. raised $2 billion through convertible senior notes with plans to use the proceeds for share buybacks, expanding its overseas business, improving its supply chain network, and addressing working capital needs. The notes bear 0.25% annual interest and mature on June 1, 2029. The initial conversion rate is 21.8830 ADSs per $1,000, equating to a $45.70 conversion price per ADS.

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