Alibaba Announces HK$80 Billion Share Placement to Fund AI Initiatives

Alibaba Group has announced a substantial equity placement of newly issued ordinary shares in Hong Kong, aiming to raise approximately HK$80 billion (around $10.2 billion) from non-US investors. This move marks the largest primary follow-on offering ever from a company listed in Hong Kong.

The share placement comes at a critical time for Alibaba, following a 75% drop in net profit reported in its fiscal Q1 2027 results, largely due to capital expenditures of about RMB 67.7 billion (approximately $9.5 billion). Shares are being offered at HK$112.70 each, reflecting a 3.6% discount from the recent closing price.

Notably, the placement is entirely targeted at non-US investors, allowing Alibaba to reduce its reliance on US capital markets amid ongoing geopolitical tensions. The offering has seen strong demand, leading to an increase in its size due to oversubscription, particularly from sovereign wealth funds.

Every dollar raised through this placement is earmarked for enhancing Alibaba's full-stack AI capabilities, which include custom chip development, data center infrastructure, and AI model deployment, rather than for debt repayment or general corporate purposes.

Alibaba's Damo Academy has been actively working on developing custom chips, while its Tongyi Qianwen large language model has gained significant traction in China. Despite the recent profit decline, Alibaba Cloud continues to lead the Chinese market, with external cloud revenue growing by 45% year over year.