Alibaba’s $5 Billion Bond Deal To See Light As Company Dapples In AI-Driven Models To Expand Consumption 

Alibaba said that the money raised through these bonds will be used to repay debts and to fund share repurchases. 

Reuters has reported that the Chinese company Alibaba, according to confidential sources, aims to raise US $5 billion in multi-tranche dollar and offshore Chinese yuan bonds. According to the report, the dollar tranche would comprise a 5.5-year, 10.5-year, and 30-year dollar bond. 

The company is also set to file a 3.5-year, 5-year, 10-year, and 20-year offshore yuan tranche. The size, interest rate, and maturity would be finalised as the transaction progressed. The e-commerce giant has said that the money raised through these bonds will be used to repay debts and to fund share repurchases. 

This billion-dollar plan comes just days after it was reported that Alibaba’s revenue missed the 239.4 billion yuan expectation despite witnessing a 5% raise earning 236.5 billion yuan in the past three months. The management is confident of the company’s future growth, and the September quarter has shown the company’s earnings improve as a result of investments in its core businesses. 

The recent Single’s Day, which is one of the biggest online shopping festivals, helped boost revenues of Taobao and Tmall Group, the core e-commerce units of Alibaba, by 1%, recording 99 billion yuan in revenue. There was a growth in new customers and double-digit year-on-year growth was recorded. 

In the past quarter, the Cloud Intelligence Group and Alibaba International Digital Commerce Group (AIDC) also improved their performance, when compared to the previous quarters, with the former delivering 29.6 billion yuan in revenue and the latter reaching 31.7 billion yuan in revenue. 

The company is employing a user-first and AI-driven strategy to navigate the price war amongst e-commerce companies in an already tumultuous Chinese economy. Alibaba CEO Eddie Wu Yongming said that the company is rapidly investing in cloud and AI infrastructure, to meet the growing demands. 

In early November, the company introduced an AI-powered search engine for small businesses across Europe and America to source supplies. This AI model was an attempt to bring in ChatGPT-like technology to boost sales. Named Accio, after the summoning spell from the popular children’s novel Harry Potter, this search engine uses text and image prompts to help business owners find wholesale products. According to company President Kuo Zhang showed a 40% rise in the business’ purchasing intent using Accio, as opposed to traditional search engines.  

This AI search engine uses pre-existing data from 50 million businesses on Alibaba International’s platform as well as public information. According to Zhang, approximately 1 billion product listings and documents across industries from more than 100 markets from Alibaba.com are available to Accio in order to generate responses suitable to specific business queries. Efforts to introduce this model in other countries as well are already underway. 

While the company’s revenue is on a consistent rise, Alibaba’s primary revenue stream is through e-commerce. Therefore, the company is ensuring that customers using Taobao and Tmall are benefiting from AI, and Alibaba’s vision for the Taobao app is to make it a one-stop portal for consumption led by AI. The Singles’ Day event reported that customers were satisfied with these available AI tools. It was also noted that these AI enhancements helped reduce marketing costs for producers and are also lowering operational costs on the platform. 

It was also recently announced that Alibaba’s process of monetising Taobao and Tmall was steadily progressing. Quanzhantui, which is a paid digital marketing tool, and the introduction of a small transaction fee that e-commerce businesses collect from the ongoing sales on their platforms have also contributed to the company’s growth rate. 

Despite these expansions, Alibaba shares dipped by 3.8% earlier this week, which is indicative of a larger ongoing economic slump, and is not reflective of the company’s performance in particular. With these new investments being announced and the dual currency bonds that will soon attain fruition, Alibaba appears to be on the path to record-breaking growth rates.