Alibaba Group Holding Ltd., China’s biggest e-commerce company, agreed to borrow $8 billion from nine banks partly to refinance debt at a lower cost, a person familiar with the matter said.
Australia & New Zealand Banking Group Ltd. (ANZ), Citigroup Inc., Credit Suisse Group AG, DBS Bank Ltd., Deutsche Bank AG, HSBC Holdings Plc (HSBA), JPMorgan Chase & Co. (JPM:US), Mizuho Corporate Bank Ltd. and Morgan Stanley will lend the funds, the person said, asking not to be identified because the details are private. Florence Shih, a spokeswoman for Alibaba in Hong Kong, declined to comment on the financing.
The Hangzhou-based company, formed in 1999 as an online marketplace for Chinese companies, will use $4.8 billion of the loans to refinance debt, $800 million to buy back preferred shares from Yahoo! Inc. (YHOO:US), and the rest for corporate purposes, the person said. The loans come amid speculation the company is preparing for an initial public offering after founder Jack Ma said in June the company could sell shares in an IPO within five years.
“These are all necessary procedures that the company needs to take before it takes the group public,” Alex Wang, an analyst at Internet consulting group iResearch in Beijing, said by phone. “Alibaba has had great demand for funding.”
The company this week agreed to pay $586 million for an 18 percent stake in Sina Corp.’s Weibo, China’s largest Twitter- like service. Alibaba has the option to increase its stake to 30 percent at “a mutually agreed valuation,” according to an April 29 statement.
Ma, who started developing the company’s mobile business three years ago, hasn’t been able to keep pace with Tencent Holdings Ltd. (700) and its WeChat messaging service for customers who access the Internet through mobile devices. Buying a stake in Weibo, with its 503 million registered users, may boost Ma’s efforts to compete with his Shenzhen-based competitor in making money from those platforms.
Alibaba has grown as economic liberalization spurred a boom in manufacturing and trade. The closely held company has expanded its workforce to more than 24,000 and added services including cloud computing, online payments and consumer auctions.
Ma, who has a net worth of $3.5 billion according to the Bloomberg Billionaires Index, is stepping down as chief executive officer this month to focus on strategy, stoking speculation the company may be preparing for an IPO.
The loans from the nine banks included three tranches, the largest being $4 billion, which matures in five years, the person said. The other parts are $2.5 billion and $1.5 billion in size, and both have three-year tenors, the person said.
“China has been very supportive toward technology companies, and Alibaba is a high-quality customer,” said Sheng Nan, a Hong Kong-based analyst at CCB International Holdings Ltd.
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