Alibaba share price slipped over 10% in Hong Kong on Monday after the after the company launched its biggest secondary share sale to fund artificial intelligence (AI)-related development. The stock declined as much as 10.16% to HK$110.50 apiece.
The Chinese e-commerce and cloud computing giant, Alibaba Group Holding Ltd, raised HK$80 billion ($10.2 billion) be sale of 710 million shares at HK$112.7 each. The price was at a discount of 3.6% to the closing price of Alibaba's American depositary receipts on Friday and 8.4% below the Hong Kong close.
The placement is Hong Kong's biggest follow-on offering by a company on record, Bloomberg reported.
The company has sold off assets and pledged to spend more than 380 billion yuan over three years toward everything from chips and data centers to large-language model development.
ALSO READ: Asian Stock Markets Today: Kospi, Nikkei Fall As Brent Slips Ahead Of Iran Sanctions Plan
The company aims to utilise the issue proceeds to invest in full-stack AI capabilities, including by expanding and enhancing its infrastructure. The follow-on offer comes as the Chinese company ratchets up quarterly capital spending to almost $10 billion to safeguard its position in the hotly contested AI race, the Bloomberg report added.
Alibaba will be subject to a lockup of 90 days. China International Capital Corp., HSBC Holdings Plc, Morgan Stanley and UBS Group AG are arranging the deal, according to the terms.
Meanwhile, in the June quarter, Alibaba's profit plunged more than 75% to 10.5 billion yuan ($1.6 billion) and it registered a free-cash outflow of $6.6 billion.
ALSO READ: Catch Stock Market Live Updates Here
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
