Alibaba is raising $5 billion from issuing convertible bonds, calling into question the Chinese ecommerce group’s ability to tap its huge cash piles to repurchase shares, reports the Finacial Times. The Hangzhou-based company on Friday said it was issuing $4.5 billion of notes convertible into stock at $105.04 per share and due in 2031, with a 0.5% coupon. The issuance includes a $500 million overallotment, which a person familiar with the matter said would be exercised.
The group said it would use the raised cash primarily to buy back shares at the current price of $80.80, fund future share repurchases, and enter into transactions to offset some of the dilution should its share price reach the convertible price.
The complex financing deal comes as Alibaba aims to continue its large share buybacks while embarking on a steep investment programme to continue its push into generative artificial intelligence.