E-commerce giant Alibaba Group is close to sewing up more than US$8 billion in financing to buy back half of the 40 per cent stake in the mainland company that Yahoo owns, a person in Hong Kong familiar with the funding initiative said.
Hangzhou, Zhejiang-based Alibaba will use about US$7.1 billion of that new capital for an initial repurchase of 20 per cent of the company held by Yahoo. The two parties reached an agreement in May for Alibaba to buy back in stages all the shares Yahoo acquired in 2005 for US$1 billion.
Yahoo chief financial officer Timothy Morse said last month that Alibaba's financing efforts were 'well on track' and the closing date of the initial share buy-back 'should be within the six months that we've previously communicated [on May 20]'.
A New York Times report yesterday citing 'people briefed on the matter' said Alibaba's financing round included a US$1.5 billion sale of convertible preferred shares, based on a US$43 billion equity valuation for the company, and the sale of US$2.6 billion in common shares, at a roughly US$35 billion valuation.
The report also said Alibaba was close to completing arrangements for US$4 billion in new borrowing from a small group of lenders.
The Hong Kong source familiar with the funding effort confirmed nearly a dozen international investors - including hedge funds, sovereign wealth funds, mutual funds and private equity firms - were involved in buying the preferred shares.