Alibaba Group Holding Ltd (阿里巴巴) chairman Jack Ma (馬雲) and vice chairman Joseph Tsai (蔡崇信) are planning to raise more than US$2 billion through a margin loan pledged against the company’s stock, according to sources familiar with the matter.
The money raised might be used to fund Blue Pool Capital Ltd, the family office of Alibaba set up by Tsai, two of the sources said. Credit Suisse Group AG, Goldman Sachs Group Inc and Morgan Stanley are among banks working on the transaction, they said.
The loan might be announced as early as this month, after a lockup period on stock owned by Ma and Tsai expires on Sept. 21, one of the source said. No final decision has been made and the deal might still fall through, they said.
Both men are billionaires with considerable stakes in Alibaba, which creates a challenge in broadening their personal holdings without panicking Alibaba investors, Wedbush Securities analyst Gil Luria said.
“Since Mr Tsai said publicly on the last earnings call that he and Mr Ma will not be selling shares at the lockup expiration, this may be their best way for diversifying their personal portfolio without breaking a promise,” Luria said.
In a margin loan, a borrower secures a loan by pledging an asset, and typically agrees to hand over cash to the lender if the value of the collateral declines. The lender can usually sell some of the collateral if the borrower is unable to post cash. Banks are keen to do these deals because of the lucrative fees.
“Share financing is very common for founders and senior executives who hold such a strong belief in the future growth potential of their companies,” Alibaba spokesman Jim Wilkinson said.
“This is prudent financial planning and management,” he said.
Alibaba shares climbed 1.4 percent on Thursday to US$66.47 at the close in New York, giving the company a market value of US$167 billion.
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