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Alibaba Resort to $4 Billion Loans For Expansion From Respective Banks

February 28
6:59 AM 2016

Alibaba Group Holding Ltd. is trying to acquire a loan of $4 billion from eight banks.  The banks are anticipated to start divesting a $3 billion loan to other lenders with the purpose of adding to the amount based on demand.

The said loan would be used to be invested for expansion plans including acquisitions.  Alibaba has been grabbing deals recently as it tries to defend itself from stiff competition with a slow growth in economy.

Last December, BNP Paribas SA analyst mentioned that China's largest online shopping company could pay as much as $38 billion in agreement this year to acquire Tencent Holdings Ltd. and Baidu Inc. These companies including Alibaba were already engaged in acquisitions of more than $30 billion in 2015 as the business develops into online-to-offline services like physical retailing and delivery.

According to Bloomberg's compiled data, Alibaba already has existing loans and credit lines of $11 billion from Deutsche Bank AG, Morgan Stanley, Citigroup Inc., and JPMorgan Chase & Co. The company's present lenders are among the banks organizing the new agreement.  Moreover, Alibaba's term loan of $2.5 billion and revolving credit line of $1.5 billion will be due this coming April 30.

The discussion which involves several banks begins with a $3 billion loan, but the said amount could possibly increase to $4 billion. The requested loan is set to get finalized by next month.

Alibaba together with its financial service affiliate informed of investing almost $1 billion in Koubei in June. It is a food-ordering app and they want to broaden its service to connect online users with brick-and-mortar business such as restaurants.  Two months after, Alibaba said it would invest $4.5 billion for almost 20% share in Suning Commerce Group Ltd, a Chinese electronics retailer, as part of its move to strengthen up its logistics by joining forces with a major bricks-and-mortar retail chain.  Also in November, the company claimed it will turn Youku Tuduo Inc., an online video provider to become a fully-owned unit with a deal of $4.4 billion, as cited by The Wall Street Journal.

Alibaba's share rose 1.8% at $67.88 on Friday's early trading. The stock dropped 18% this year on Thursday's close of $66.66, Jakarta Globe reports.

Alibaba is in talks with several banks resorting to a loan of almost $4 billion for expansion. The existing lenders are already organizing the new deal where it will be finalized next month. Alibaba ventures in different businesses including online food service, videos, online shopping startup Snapdeal.com and One97 Communications Ltd. that runs Paytm, a local online-payment system. 

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