Alibaba (09988) announces HK$80 billion IPO betting on AI Choi Sung-sun and Wu Yongming to increase their total holdings by HK$120 million

The Zhitong Finance App learned that after announcing the HK$80 billion IPO and increasing full-stack AI capacity building, Alibaba (09988) management quickly cast a “vote of confidence” with practical actions. According to the Hong Kong Stock Exchange's latest disclosure, Alibaba Group Chairman Choi Chung-sun and CEO Wu Yongming recently increased their holdings of Alibaba Hong Kong shares by a total of 1.07 million shares, involving an amount of about HK$120 million. Among them, Choi Chung-sun bought 720,000 shares, an average of about HK$112 per share, at a cost of about HK$80 million; Wu Yongming bought 350,000 shares, with an average cost of about HK$111.6 per share, at an average cost of about HK$40 million.

This increase in holdings occurred after Alibaba announced a large-scale allotment of shares. On August 23, Alibaba announced that it plans to place 710 million new shares at an allotment price of HK$112.7 per share, and is expected to raise approximately HK$80 billion. This is Alibaba's first IPO since its listing in Hong Kong in 2019, and it is also one of the largest post-listing IPO placements for Hong Kong listed companies. The company clearly stated that all of the net proceeds from this placement will be used to invest in full-stack AI capabilities, including further strengthening AI infrastructure construction.

According to market news, the placement received a positive response from institutional investors. According to sources close to the transaction, the final order volume exceeded HK$200 billion, reaching nearly 3 times the oversubscription amount. Among them, the final subscription ratio for sovereign wealth funds and long-term funds exceeded 40%. Major sovereign funds from the Middle East, Europe and Asia all actively participated.

It is worth noting that while the company's large-scale financing increased AI, Cai Chongxin and Wu Yongming chose to use personal funds to increase their holdings in the company. The timing is quite sensitive. Market participants believe that the two core management quickly increased their holdings after the announcement of the placement. On the one hand, it showed management's recognition of the current stock price and the company's long-term value, and on the other hand, it also sent a positive signal about Ali's AI strategy and future commercialization prospects.

From a strategic perspective, Ali is accelerating its transformation from a traditional e-commerce platform to an “AI+ cloud” driven technology company. Cai Chongxin and Wu Yongming stated in a letter to shareholders in May of this year that Alibaba's AI business has passed the initial investment stage and is entering a commercial payback cycle. The company will continue to increase investment in AI infrastructure, self-developed chips, basic models, and MaaS, and strive to make “AI+ Cloud” a new growth engine.

The current HK$80 billion financing means that Ali will further obtain sufficient capital and ammunition to build full-stack AI capabilities such as computing power infrastructure, chips, models, and applications. At the same time, active subscription of global long-term capital and simultaneous increase in core management's holdings have also strengthened the market's attention to the long-term investment logic of Alibaba's AI to a certain extent.

However, judging from the performance of the secondary market, there are still differences in the short-term return of capital investment on large-scale AI. On August 24, Alibaba's Hong Kong stock opened low and closed at HK$112.50, down 8.54%, basically falling close to the current placement price.

Overall, Ali's current placement is not simply a supplement to liquidity, but a large-scale capital investment centered around the AI strategy. The placement was oversubscribed by long-term capital. In addition, Choi Chung-sun and Ng Wing-ming increased their holdings by about HK$120 million in total, all indicating that management is using capital and action to strengthen the market's confidence in AI's long-term strategy. In the future, as AI infrastructure investment is gradually transformed into cloud business growth and model and application commercialization revenue, the input and output efficiency of Alibaba's AI strategy will become an important observation point for the market to re-evaluate the company's valuation.