Alibaba shares slide 8% after record $10.2 billion Hong Kong share sale

Alibaba's Hong Kong-listed shares fell 8% in early trading on Monday, following the finalisation of a massive HK$80 billion ($10.21 billion) share placement. The company sold 710 million new shares at HK$112.70 each, an 8.4% discount to its previous closing price.

The deal marks the largest primary follow-on offering ever by a Hong Kong-listed company. Globally, it ranks as the third-largest equity offering this year, trailing only those from Alphabet and Intel.

Proceeds from the placement are earmarked for artificial intelligence-related development, including the expansion of supporting infrastructure. The move comes just a week after Alibaba reported quarterly earnings that showed it had already consumed nearly half of its three-year capital expenditure plan.

In its earnings report, the company also revised its projected payback period for AI investments down to two and a half years from three, citing surging demand for AI services. However, the heavy spending took a toll on profitability, with quarterly net profit falling 75% year-on-year.

Separately, Alibaba Cloud, the company's digital technology and AI division, launched its third data centre in South Korea last week. This expansion brings its network to 104 availability zones across 30 regions, part of a broader pledge announced in October to invest 380 billion yuan ($56.54 billion) in AI infrastructure over three years.