Alibaba (9988.HK) launched an HK$80 billion ($10.2 billion) share placement in Hong Kong on Sunday, Aug. 23, with all net proceeds earmarked for artificial intelligence development.
The Chinese e-commerce and cloud computing company said the Alibaba share placement would become the largest primary follow-on offering by a Hong Kong-listed company if completed. It also described the transaction as the biggest Regulation S equity offering on record.
A term sheet reviewed by Reuters showed Alibaba planned to sell 710 million ordinary shares at HK$112.70 each. The price represented a 3.6% discount to the company’s most recent closing price.
Alibaba said 100% of the net proceeds would support its “full stack” AI capabilities, including chips, computing infrastructure and the development and deployment of artificial intelligence models. The company did not disclose a more detailed breakdown of the planned spending.
The company said last week that it had already spent nearly half of its three-year capital expenditure plan. Alibaba also said the expected payback period on AI-related investments was on track to fall to 2.5 years from three years as demand increased.
Alibaba’s quarterly net profit fell 75% from a year earlier as AI-related capital spending increased. Chief Executive Eddie Wu said the company needed to build additional computing capacity to capture future growth.
Two people familiar with the transaction told Reuters that investor demand, including interest from sovereign wealth funds, was strong and that Alibaba increased the offering after it became oversubscribed. Morgan Stanley, HSBC, UBS and CICC were serving as joint bookrunners, according to people familiar with the deal.
 in Hong Kong, net proceeds earmarked for expanding the company’s AI capabilities.){kind=link}