TLDR
- Alibaba completes $3.2 billion convertible notes offering, 2025’s largest deal
- Jefferies boosts BABA price target to $178 from $165, keeps Buy rating
- Funds target AI infrastructure, data centers, and international expansion
- Investor demand exceeded offering size multiple times
- Cloud business shows strong AI revenue growth potential
Alibaba Group Holding Ltd. closed a $3.17 billion convertible notes deal this week. The offering represents the year’s biggest convertible bond issuance.
The zero-coupon notes mature in 2032. They convert to American depositary receipts at a 31.25% premium to Thursday’s close.
Strong investor interest drove demand several times above the offering size. Alibaba stock rose 0.4% to HK$143.30 in Hong Kong trading.
Analyst Upgrades Price Target
Jefferies lifted its BABA price target to $178 from $165. The firm maintained its Buy rating on the Chinese e-commerce giant.
The analyst upgrade cited strong cloud business execution expectations. Jefferies sees continued AI-related revenue growth at Alibaba Cloud.
The stock currently trades at $147.10 with year-to-date gains of 76.39%. Strong performance reflects investor confidence in the company’s AI strategy.
Capital Allocation Plans
Alibaba will deploy convertible bond proceeds across multiple areas. Data center scaling and technology upgrades represent key priorities.
International commerce operations will receive funding support. The company previously announced $53 billion in AI infrastructure spending over three years.
Competition remains intense in China’s tech sector. Alibaba faces rivals including Meituan and JD.com across various market segments.
The company committed another 1 billion yuan in incentives this week. These funds aim to boost traffic to popular online services.
Cloud Growth Drivers
Jefferies expects Alibaba Cloud’s AI revenue to maintain rapid expansion. External revenue contribution continues increasing within the cloud division.
The analyst noted synergies between Quick Commerce and traditional e-commerce. User experience improvements span Alibaba’s platform ecosystem.
Street Stars launched through Amap advances lifestyle services offerings. The release expands Alibaba’s digital service portfolio.
Chinese tech companies are accelerating capital raises. Baidu raised 4.4 billion yuan from dim sum bonds following March’s 10 billion yuan issuance.
Tencent considers its first public debt offering in four years. The company may issue offshore yuan bonds this month.
Asian convertible bond sales approach multiyear highs in 2025. These instruments provide cheaper capital than traditional debt in current conditions.
Investment banks benefit from the fundraising wave. Barclays, Citigroup, HSBC, JPMorgan, Morgan Stanley and UBS managed Alibaba’s latest offering.
Alibaba raised $5 billion in convertible bonds last year. That transaction set Asian company records for dollar-denominated issuances.
The new convertible notes include a 90-day issuer lock-up period. This restricts certain company actions during initial trading.
