Alibaba Group Holding Ltd., China’s biggest e-commerce company, has approached banks for a loan of as much as $8 billion, two people familiar with the matter said.
About $4 billion of the proceeds would be used to refinance a facility of that size signed last year for the privatization of Alibaba’s Hong Kong-listed entity Alibaba.com and a buyback of a stake in itself owned by Yahoo! Inc. (YHOO), the people said. The remainder would be used for general corporate purposes, one of the people said. Both asked not to be identified because the details are private.
Alibaba, established in 1999 as an online marketplace for Chinese companies, has grown as economic liberalization spurred a boom in manufacturing and trade. It has expanded its workforce to more than 24,000 and added services including cloud computing, online payment and consumer auctions. Billionaire founder Jack Ma said in January he would step down as chief executive officer on May 10, stoking speculation the company may be preparing for an initial public offering.
A Hong Kong-based Alibaba official declined to comment on the financing talks today. IFR Asia reported news of the loan of as much as $8 billion yesterday, citing unidentified people familiar with the plans.
Last year’s $4 billion borrowing was split into $2 billion of three-year and four-year loans from China Development Bank Corp. and $2 billion of three-year and four-year loans from international lenders, other people familiar with the matter said at the time.
Borrowing costs have dropped as bond-buying by global central banks to stimulate the world economy boosts the supply of cash in the financial system. Average interest margins over the London interbank offered rate for dollar loans in Asia fell 36.6 basis points to 252.7 basis points in the second half of 2012 from the first six months of the year, Bloomberg data show.
An $8 billion facility would be the biggest syndicated in the Asia-Pacific region outside Japan since Inpex Corp. (1605) signed $20 billion of loans for its Ichthys project in Australia in December, according to data compiled by Bloomberg.