Aug 23 (Reuters) - China's Alibaba on Sunday launched a HK$80-billion ($10.2 billion) share placement to fund artificial intelligence-related development.
A deal by the Chinese e-commerce and cloud computing giant would mark the largest-ever primary follow-on offering by a Hong Kong-listed company.
It would rank as the world's third-largest primary follow-on share sale this year after offerings from Alphabet and Intel.
The company said it intends to use 100% of the net proceeds from the placement to invest
in its "full stack" AI capabilities, a category that includes chips, infrastructure and the development and deployment of AI models.
A term sheet reviewed by Reuters showed Alibaba planned to sell 710 million ordinary shares at HK$112.70 a share. That represented a 3.6% discount to its most recent closing price.
In its announcement for the $10.2 billion share placement, Alibaba did not reveal additional details on its investment plans by category of its planned AI-related investment.
It did not comment beyond its regulatory disclosure.
Last week, Alibaba reported its results for the April-to-June quarter, saying it had already spent nearly half of its three-year capex investment plan. It said its expected payback on AI-related investments was on track to fall to 2.5 years from 3 years, driven by surging demand.
Alibaba's net profit for the quarter fell 75% from a year earlier as it ramped up its AI-related capital expenditures.
"In order to be able to capture that future growth, we first need to make these capex investments to build out the necessary compute capacity," CEO Eddie Wu said on an earnings call.
The company's share offering has been met with strong demand from investors, including sovereign wealth funds, two people familiar with the deal told Reuters. They could not be named because the information was not public.
Alibaba increased the size of the offering after the deal was oversubscribed, the people familiar with the matter said.
Morgan Stanley, HSBC, UBS and CICC are serving as joint bookrunners of the Alibaba offering, said one of the sources and a third person with knowledge of the matter. The banks did not immediately respond to a Reuters request for comment.
The share placement was not registered under U.S. securities laws as an offshore transaction, meaning American investors were not eligible to participate, Alibaba said.
Since 2022, the global AI boom has fuelled staggering capital outlays on infrastructure and data centers, including in the U.S. and China.
The four major U.S. hyperscalers - Microsoft, Amazon, Alphabet and Meta - together are expected to spend roughly $725 billion in capital expenditures in 2026, much of it tied to AI data centers, chips and cloud infrastructure.
($1 = 7.8396 Hong Kong dollars)
(Reporting by Kane Wu in Hong Kong and Casey Hall in Shanghai; additional reporting by Gnaneshwar Rajan in Bengaluru; Editing by William Mallard, Raju Gopalakrishnan and Thomas Derpinghaus)
