What's behind Alibaba’s quest to raise US$30 billion?

SINGAPORE (Aug 12): Why would a hugely profitable, cash-flush firm raise more money than has ever been raised by a listed company? That is the question befuddling investors. Hangzhou-based, New York-listed e-commerce behemoth Alibaba Group Holding, China’s largest company by market capitalisation, currently has nearly US$30 billion ($41.46 billion) in cash and cash equivalent on its balance sheet. Two months ago, Alibaba filed with Hong Kong’s Securities and Futures Commission to raise at least US$20 billion more in a secondary listing in Hong Kong later this year.

At the same time, the Chinese e-commerce icon remains committed to raising up to US$10 billion in Shanghai as part of China’s plan to get its homegrown tech champions, including Hong Kong-listed super-app operator Tencent Holdings and US-listed search engine giant Baidu, to list on the mainland, allowing local shareholders to partake in their success.

You do not have to be a maths wizard to add up the numbers. If Alibaba raises US$20 billion in Hong Kong and another US$10 billion or so in Chinese domestic markets, as it has previously committed to do, it will have more than US$60 billion net cash on its balance sheet. Does a profitable company that has been consistently boosting the profitability of its core e-commerce businesses need US$30 billion additional cash when it has almost that much lying idle in the kitty already?

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