Alibaba has launched a HK$80 billion ($10.2 billion) primary share placement to fund chips, AI infrastructure and models, marking the largest-ever follow-on offering of new shares by a Hong Kong-listed company, according to Reuters.
The Chinese e-commerce and cloud computing company is selling 710 million ordinary shares at HK$112.70 each.
The placement price represents an 8.4% discount to Alibaba’s closing price on Friday before the transaction was announced.
The newly issued shares will represent approximately 3.6% of Alibaba’s enlarged outstanding share count.
Investors initially reacted negatively to the dilution and the discount associated with the offering.
Alibaba’s Hong Kong-listed shares fell as much as 10.5% during Monday trading before recovering some of those losses and trading closer to the placement discount.
Demand for the offering was nevertheless substantial.
The placement attracted approximately $28 billion of orders, according to people familiar with the transaction, nearly three times the amount Alibaba was seeking to raise.
Approximately $6 billion of those orders came from long-only and sovereign investors.
Roughly 40% of the final book is expected to be allocated to long-only and sovereign investors, including major sovereign wealth funds from Europe, Asia and the Middle East.
Investors in the offering included Qatar Investment Authority, Norway’s Norges wealth fund and Hillhouse, according to a person cited by Reuters. The organizations did not immediately confirm their participation.
Alibaba Chairman Joe Tsai also bought 720,000 Hong Kong-listed shares at an average price of about HK$112 per share, for an aggregate investment of roughly HK$80 million.
CEO Eddie Wu purchased another 350,000 shares at an average price of HK$111.60, representing approximately HK$40 million, according to stock exchange disclosures.
Alibaba plans to deploy the new capital as AI becomes an increasingly important growth engine for the company.
Proceeds will support AI chips, computing infrastructure and model development as Alibaba competes to establish itself as one of China’s leading artificial intelligence platforms.
The company’s Qwen family of AI models has gained significant adoption in China, while Alibaba is also developing AI agents that connect services across its broader ecosystem, including e-commerce, food delivery, travel and entertainment.
Alibaba separated its AI operations from its cloud business earlier this year, putting the new organization under Wu’s leadership.
The company is also preparing a potential listing of its T-Head semiconductor operation as it builds more proprietary computing infrastructure.
Developing in-house chips could become increasingly important as U.S. export restrictions limit Chinese companies’ access to NVIDIA’s most advanced AI processors.
Those constraints have encouraged Chinese technology companies to develop models and infrastructure that can operate more efficiently with available computing resources.
Alibaba has already committed nearly half of its three-year capital expenditure program totaling 380 billion yuan, or approximately $56.5 billion.
Management has indicated that it expects its AI computing investments to generate attractive returns, with Wu saying those investments could reach break-even within approximately 2.5 to three years as utilization improves and proprietary chips increasingly replace third-party hardware.
The capital commitment comes as AI has become particularly important to Alibaba’s growth profile while its mature e-commerce operation faces slower expansion.
Alibaba recently reported a 75% year-over-year decline in quarterly net profit, with elevated AI investment contributing to the decrease.
Despite the scale of Alibaba’s spending, Chinese technology companies collectively remain far behind their largest U.S. counterparts in AI capital expenditure.
Capital Group estimates that Microsoft, Amazon, Alphabet, Meta and Oracle had generated approximately $791 billion of AI-related capital spending as of July 31.
By comparison, ByteDance, Alibaba, Tencent and Baidu accounted for approximately $118 billion.
Alibaba’s transaction also illustrates how the global AI infrastructure race is increasingly being financed through enormous capital raises.
Its $10.2 billion offering is the third-largest primary follow-on equity transaction globally this year, behind nearly $85 billion raised by Alphabet and $20 billion raised by Intel.
For Alibaba, the substantial investor demand provides additional balance-sheet capacity to pursue AI infrastructure at scale despite near-term concerns about dilution, capital intensity and execution.
