Alibaba (BABA, Financial) is quietly pulling a familiar lever to raise fresh capital—this time through a HK$12 billion ($1.5 billion) bond offering exchangeable into shares of its healthcare unit, Alibaba Health. The zero-coupon bonds, maturing in 2032, come with a 40%–50% exchange premium over a yet-to-be-finalized reference price, which will be determined through a concurrent delta placement. The structure is designed to let investors hedge their position while Alibaba unlocks value from a strategic asset—without a direct equity sale.
It's a playbook we've seen before. Earlier this year, Baidu used a similar structure to raise $2 billion via Trip.com-linked exchangeables. These types of bonds offer companies a way to trim stakes in subsidiaries while keeping upside optionality alive. For Alibaba, the timing may be more than financial housekeeping. By tapping this route, the company may be signaling that it sees better return opportunities elsewhere—namely, in its cloud infrastructure and international commerce business, where proceeds are expected to be reinvested.
JPMorgan, UBS, Citi, and Morgan Stanley are running the books on the deal. For investors, the structure raises some interesting questions: Will Alibaba Health see enough momentum to hit the premium? Will Alibaba's core bets—cloud and global e-commerce—deliver the returns needed to justify the trade-off? This isn't just a capital raise—it could be a signal of what Alibaba sees coming next.
