Alibaba plans record $10.2 billion Hong Kong share sale to fund AI

Alibaba Group Holding Ltd. plans to raise $10.2 billion through a Hong Kong share sale, marking the largest primary follow-on offering by a Hong Kong-listed company and the third-largest globally this year. The transaction involves selling 710 million ordinary shares at HK$112.70 each, a 3.6% discount to the stock's recent closing price.

All net proceeds will be allocated to Alibaba's "full stack" AI capabilities, including semiconductors, computing infrastructure, and AI model development and deployment. Investor demand for the placement has been strong, with interest from sovereign wealth funds, according to sources familiar with the transaction. Morgan Stanley, HSBC, UBS, and China International Capital Corp. are acting as joint bookrunners.

Alibaba has already spent nearly half of its three-year capital expenditure program, and the expected payback period for AI investments is projected to shorten to 2.5 years from three years. CEO Eddie Wu emphasized the need for sufficient computing capacity to capture future growth, noting that the heavy investment has impacted near-term earnings, causing the company's net profit to fall 75% in the April-to-June quarter due to increased AI-related capital spending.