Alibaba Group Holding Ltd. is seeking to raise $3.17 billion through an offering of zero-coupon convertible notes, Bloomberg reported, marking the largest deal of the year.
The notes, due in 2032, will convert into the company’s American depositary receipts (ADRs), according to deal terms seen by Bloomberg. Alibaba’s ADRs fell 1.7% to $141.53 in after-hours trading on Wednesday, following a 71.1% gain year-to-date through Wednesday’s close.
Proceeds from the offering are intended to scale up Alibaba’s data centers, upgrade technology, and expand international commerce operations, reflecting the company’s ongoing competition for Chinese consumers with rivals including Meituan and JD.com Inc., Bloomberg noted.
This follows Alibaba’s record $5 billion convertible bond issuance last year, which was the largest dollar-denominated deal by an Asian company at the time. In July, the company also raised HK$12 billion ($1.5 billion) through bonds exchangeable into shares of Alibaba Health Information Technology Ltd.
The new notes carry a conversion premium of 27.5% to 32.5% over the reference price, with a 90-day lock-up for the issuer from the pricing date. Leading global banks including Barclays Plc, Citigroup Inc., HSBC Holdings Plc, JPMorgan Chase & Co., Morgan Stanley, and UBS Group AG are managing the offering.
