Alibaba Group Closes $3 Billion Loan Deal For Acquisitions and Investments
Alibaba has finally received a $3 billion loan it requested for from eight Chinese banks last week.
Alibaba Group Holding is currently focused to expand its global footprints and improve its international market presence. According to sources, the company intends to make its name through deals and acquisitions and has no plans to take its operations in overseas markets for the time being. It has been pouring money in the e-commerce startups in India and is also looking to buy out China’s YouTube equivalent known as Youku Tudou. To fund its expansion plans, the Chinese tech giant asked numerous Chinese banks to raise money up to $4 billion as loan.
It is now believed that the tech company is all set to sign more deals and acquisitions in the coming years. Since 2014, it has literally been pouring money in several startups in and out of China. Alibaba Group recent investment spree includes $3.5 billion Youku Tudou buyout and stakes in Indian startups, such as PayTM and Snapdeal. It is also exploring options to buy stake in India’s leading e-commerce Flipkart. Groupon and Snapchat is also in the list in which the company has invested recently.
According to Tech Crunch, all of these investments are about to be revamped as Alibaba confirmed that it has finally received a huge $3 billion loan from the banks. The loan is not unexpected as Alibaba requested for it a couple of days ago and was expecting to finalize the deal this week. The Wall Street Journal reported that the firm was in negotiations with the bank since February but it is just a million away from $4 billion loan.
According to the SEC filing published today, “Alibaba Group Holding Limited today signed a five-year US$3 billion syndicated loan agreement with a group of eight lead arrangers. The loan, which is subject to upsize through oversubscriptions in syndication, has a five-year bullet maturity and is priced at 110 basis points over LIBOR. The use of proceeds of the loan is for general corporate purposes.”
It was announced yesterday that Alibaba has hired about eight banks to raise the $4 billion loan to fund its expansion plans. In the above filing, the ‘general corporate purposes’ is pretty clear to almost everyone who knows about the company’s plan for the future.
One of the sectors that the e-commerce leader wants to strengthen is the online media. Previously, it already invested and bought South China Morning Post, which is Hong Kong’s leading English Language newspaper. The deal was only made to bolster its media division. Joseph Tsai, the vice chairman of Alibaba, also confirmed its focus on this division. It recently made a bid for China’s video portal ‘Youku Tudou’, which reportedly claims to have 500 million monthly users. It is also looking to invest in Weibo, which is a micro blogging service.
Weibo will assist Alibaba in significant growth of its advertising and analytics reach. Furthermore, it plans to do business outside China as well. Currently, it has 80% e-commerce market share in China but little or no presence in the international markets. It is expanding in the Indian market by investing in the top ranked startups to improve its reach.
