Alibaba Eyes $8 Billion in Bond Sale Amid Regulatory Heat From Beijing

China's largest online retailer will look to bolster its balance sheet as it deals with Jack Ma-centered rumors and regulatory woes.
Anthony RussoJan 06,2021,17:17

Alibaba Group (NYSE: BABA; HKEX: 09988) is planning on raising up to $8 billion through the sale of “dollar bonds” as soon as next week in efforts to boost its capital amid the e-commerce giant’s regulatory pressure from Beijing and confusion surrounding its co-founder.

At a minimum, China’s largest online retailer will look to raise $5 billion from the bond sale but could net more depending on the “reception,” as reported by Bloomberg today, citing anonymous people familiar with the situation. The report added that Alibaba will seek to raise the funds through a so-called “multi-tranche” offering, but “tenors” have yet to be set.

In its Hong Kong secondary listing in late 2019, with the underwriters expressing their over-allotment option, Alibaba raised $13 billion. The bond sale would help strengthen Alibaba’s balance sheet, which showed, cash, cash equivalents, and short-term investments of nearly $60 billion, as of September.

The bond sale comes as there has been speculation about Alibaba co-founder Jack Ma going “missing” after he didn’t show up at the finale of his talent show, Africa’s Business Heroes. While Ma hasn't made a public appearance in more than two months, CNBC’s David Faber cooled investors’ concerns down a bit Tuesday, noting that China’s richest man is “lying low” rather than “missing.”

As Ma has gone into hiding, Alibaba has been facing intense regulatory heat from Beijing. Just last week, Alibaba was slapped with a second fine at the maximum amount of 500,000 yuan from the State Administration for Market Regulation

In addition to Alibaba, Jack Ma’s fintech empire Ant Group has also been dealing with regulatory scrutiny. The fintech giant, majority-controlled by Ma with Alibaba holding a 33% stake, has had its record-breaking IPO suspended indefinitely that was slated to occur simultaneously on the Stock Exchange of Hong Kong and on Shanghai’s STAR market.

In the last couple of months or so, Alibaba has lost tens of billions of dollars in market capitalization.

While Alibaba’s New York stock gained Tuesday, it's back down today along with other tech giants, as Democrats are expected to retake control of the Senate.

Intraday, Alibaba the stock in Alibaba was trading nearly 2% lower at $236.10 per American depositary share.

Topics:Alibaba, Jack Ma, Ant Group,